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Summary of Hearings on Energy (12-12-08)

  • December 10, 2008: Senate Committee on Energy and Natural Resources Hearing to receive testimony regarding investments in clean energy and natural resources projects and programs to create green jobs and to stimulate the economy
  • September 12, 2008: Senate Committee on Energy and Natural Resources Summit to consider how to achieve a more secure, reliable, sustainable, and affordable energy future for the American people.
  • July 30, 2008: House Select Committee on Energy Independence and Global Warming Hearing on "What's Cooking with Natural Gas: Hearing to Examine Fuel's Role in Global Warming Solutions"
  • June 25, 2008: Full Senate Committee on Energy and Natural Resources Hearing on “The Challenges to Meeting Future Energy Needs and Developing Technologies for Meeting Increased Global Energy Demand in the Context of the Need to Address Global Climate Change”
  • June 17, 2008: Full Senate Committee On Energy and Natural Resources Hearing to Examine the Challenges and Regional Solutions to Developing Transmission for Renewable Electricity Resources
  • June 12, 2008: House Committee on Natural Resources Subcommittee on Water and Power Oversight Hearing on “Hydropower: Providing 75% of America’s Current Renewable Energy. Exploring its Role as a Continued Source of Clean, Renewable Energy for the Future”
  • June 12, 2008: House Committee on Natural Resources Subcommittee on Energy and Natural Resources Oversight Hearing on “Spinning Straw Into Black Gold: Enhanced Oil Recovery Using Carbon Dioxide”
  • November 6, 2007: Senate Full Committee on Energy and Natural Resources Hearing To Receive Testimony on the Domestic Energy Industry
  • September 26, 2007: Senate Full Committee on Energy and Natural Resources
    Hearing on S.1543, A Bill to Establish a National Geothermal Initiative
  • June 21, 2007: Senate Commerce, Science, and Transportation Subcommittee on Science, Technology, and Innovation hearing on "Energy Efficiency Technology"
  • June 14, 2007: House Committee on Science and Technology Subcommittee on Energy and Environment hearing on "A Path Toward the Broader Use of Biofuels"
  • June 6, 2007: House Natural Resources Committee Mark up of H.R. 2337 "Energy Policy Reform and Revitalization Act 2007"
  • May 24, 2007: Senate Finance Committee subcommittee on Energy, Natural Resources and Infrastructure hearing on "Energy Efficiency: Can Tax Incentives Reduce Consumption?"
  • May 24, 2007: Senate Energy and Natural Resource Committee hearing on "Challenges Associated with Coal Gasification, Including Coal to Liquids and Industrial Gasification"
  • May 23, 2007: Joint Economic Committee hearing on "Is the Market Concentration in the U.S. Petroleum Industry Harming Consumers?"
  • May 23, 2007: House Natural Resources Committee legislative hearing on H.R. 2337, the "Energy Policy Reform and Revitalization Act of 2007"
  • May 17, 2007: House Science and Technology Committee Energy and Environment Subcommittee hearing on "Developing Untapped potential: Geothermal and Ocean Power Technology"
  • May 15, 2007: House Science and Technology Committee Energy and Environment Subcommittee hearing on "Prospects for Advanced Coal Technologies: Efficient Energy Production, Carbon Capture and Sequestration."
  • May 8, 2007: Senate Appropriations - Subcommittee on Energy and Water Development hearing on "The politics and funding necessary for reducing U.S. oil dependence"
  • March 22, 2007: House Foreign Affairs Committee, hearing on "Foreign Policy and National Security Implications of Oil Dependence"
  • March 1, 2007: Senate Committee on Energy and Natural Resources, hearing on the EIA's Annual Energy Outlook 2007
  • February 28, 2007: House Appropriations Committee, Subcommittee on Energy and Water Development, hearing on "10-Year Energy Research and Development Outlook"
  • February 26, 2007: House Natural Resources Subcommittee on Energy and Mineral Resources, hearing on the Administration's FY 2008 Budget Requests for the MMS, BLM, Energy and Minerals programs, OSM, Minerals Geology Program of the Forest Service, and USGS
  • January 25, 2007: Senate Committee on Energy and Natural Resources Oversight Hearing on Oil and Gas Resources on the Outer Continental Shelf
  • January 18, 2007: Senate Committee on Energy and Natural Resources Oversight Hearing on Oil and Gas Royalty Management

Senate Committee on Energy and Natural Resources Hearing to receive testimony regarding investments in clean energy and natural resources projects and programs to create green jobs and to stimulate the economy
December 10, 2008


Witnesses

Panel I
Mr. Bracken Hendricks, Senior Fellow, Center for American Progress
Mr. Kevin Book, Senior Analyst and Senior Vice President, Friedman Billings Ramsey & Company, Inc.
Mr. Malcolm Woolf, Director, Maryland Energy Association
Mr. Joe Loper, Vice President of Policy and Research, Alliance to Save Energy
Mr. Steve Hauser, Vice President, GridPoint

Panel II
Dr. Cassandra Moseley, Director of the Ecosystem Workforce Program, Institute for Sustainable Environment, University of Oregon
Mr. Mark Limbaugh, Former Assistant Secretary for Water and Science, U.S. Department of the Interior
Mr. Denis Galvin, Former Deputy Director , National Park Service

Members Present
Chairman Jeff Bingaman (D-NM)
Ranking Member Pete Domenici (R-NM)
Maria Cantwell (D-WA)
Lisa Murkowski (R-AK)
Ken Salazar (D-CO)
Ron Wyden (D-OR)
Jim Bunning (R-KY)
Jon Tester (D-MT)
Blanche Lincoln (D-AR)
Bernard Sanders (I-VT)
John Barrasso (R-WY)

Chairman Jeff Bingaman (D-NM) opened the hearing by saying that a stimulus bill is expected to be taken up early in the 111th Congress. President-elect Barack Obama has called for the bill to focuses on clean energy, conservation, and infrastructure programs which will balance the creation of green collar jobs in the short term with a long term return on the investment. Bingaman noted that in addition to testimony of the witnesses present at the hearing, many other interested parties have submitted proposals of ideas to be considered as part of a stimulus package. These proposals have been submitted for the record and will be posted on the Committee website.

Ranking Member Pete Domenici (R-NM) congratulated the Committee on Energy and Natural Resources for accomplishing a tremendous amount in the last six years to move the U.S. forward in its energy goals. He pointed out that there are already billions of dollars of projects authorized by previous energy bills that could be drawn upon for the stimulus bill. Domenici cautioned that one major challenge for projects being considered are delays in implementation because of environmental regulations. He also voiced doubts that spending would help the U.S. get out of the current recession, citing studies from the last two recessions. However, he was hopeful about Obama’s leadership.

Bracken Hendricks, Senior Fellow at the Center for American Progress Action Fund CAPAF), described the CAPAF’s recommendation to spend $350 billion in the first year of a stimulus package with over $100 billion dedicated to clean energy and environmentally beneficial projects and programs. In comparison, a stimulus package which simply increases household consumption (such as in April 2008) would create about 16% fewer jobs. In addition, the jobs created by a green recovery program would be higher paying and have long-term benefits like reducing consumer energy bills and stabilizing the cost of oil and gas.

Mr. Kevin Book, Senior Analyst and Senior Vice President of Friedman Billings Ramsey & Company Inc, explained to the Committee that three major disincentives for investing in clean energy today are low commodity prices, limited access to credit, and the lack of explicit surplus payments. He emphasized that complete economic recovery will require private investment.

Mr. Malcolm Woolf, Director of the Maryland Energy Association, encouraged any energy legislation in the stimulus bill to draw on state energy offices for implementation, describing them as a “ready-made, 50-state delivery mechanism.” Woolf listed specific funding levels for various programs that could be administered through the states.

Mr. Joe Loper testified as the Vice President of Policy and Research at Alliance to Save Energy, an organization which promotes energy efficiency worldwide. He proposed that “at least a few tens of billions of dollars could be effectively absorbed over the next two years to expand energy efficiency programs that already exist or that could be initiated with immediate energy savings and job creation.” Loper outlined specific projects and suggested funding levels, mostly for projects related to building efficiency but also including public transit, appliances, and manufacturing.

The testimony of Mr. Steve Hauser, Vice President of GridPoint, focused on the benefits of investing in smart grid technology. Hauser presented a request for $1.3 billion for fiscal year 2009 to fund Title XIII of the Energy Independence and Security Act of 2007 (PL 110-140). This section of the law authorizes investment in research and development, workforce development, infrastructure, and demonstration projects related to smart grid.

During the discussion period, Domenici made a plug for nuclear to be part of any energy solution. Book responded that currently support through appropriations and workforce are lacking to make this a reality. Senator Lisa Murkowski (R-AK) also highlighted the importance of developing the workforce to implement energy solutions in general. She shared an example from Alaska where they tried to implement weatherization on a large scale but found they did not have the workforce to support such a project.

Another common theme during the discussion was the importance of committing to a long term investment in energy solutions. Senator Blanche Lincoln (D-AR) and witnesses Hendricks and Loper all underlined the importance of a sustained program that would, in Loper’s words, “break the cycle of complacency.”

Senator Ken Salazar (D-CO) pressed the witnesses for solid numbers for the amount of a stimulus package that should be dedicated to clean energy. Hendricks responded that the CAPAF believes that one fourth to one third of any stimulus packages should be for energy. This would translate to about $120 billion in the first year. Hauser and Book proffered similar amounts. Salazar also asked how much would be needed to for the smart grid. Hendricks suggested $10 billion in the first year. Woolf reported that the several projects that have been planned in New England would require several billion alone.

Dr. Cassandra Moseley, Director of the Ecosystem Workforce Program at the Institute for Sustainable Environment at University of Oregon, gave the first testimony of the second panel of witnesses. She made the case that another key dimension of green economic stimulus is investing in the restoration and stewardship of U.S. public lands: fire hazard reduction, urban tree planting, road and river restoration, and more. This would be a good way to benefit rural public lands communities, which have been hard hit by the economic crisis. Moseley recommended that $2 to $3.5 billion be awarded per year per agency to the U.S. Forest Service and the Bureau of Land Management. With $8.5 billion over two years, she estimates 127,000 jobs would be created.

Mr. Mark Limbaugh, Former Assistant Secretary for Water and Science at the U.S. Department of the Interior, spoke to the benefits of investing in water infrastructure. He identified several specific programs and responsibilities within the Bureau of Reclamation which would be good places to invest: aging federal water facilities, rural water development, water conservation, recycling and reuse, environmental mitigation and restoration infrastructure, and water-related renewable energy sources.

Mr. Denis Galvin, Former Deputy Director of the National Park Service (NPS), reported that the NPS has about $1 billion in ready-to-go projects. These projects include restoring historic structures, repairing National Park infrastructure, greening park facilities, and fixing trails, and would produce around 22,000 jobs. Galvin pointed out that the parks provide a prime opportunity to display green design techniques as an educational tool for the 275 million visitors the parks receive annually.

Echoing Senator Domenici’s concern about the ability for rapid movement on environmental projects, Senator Bingaman asked the panel whether the proposed projects are National Environmental Policy Act (NEPA) ready. Galvin responded that at least one half of the projects are in rehabilitation, which has very low NEPA requirements. Limbaugh suggested that many of the water projects were also rehabilitation of existing sites with little to minimal NEPA requirements. Moseley supported idea that NEPA requirements would not unduly delay projects based on agency-provided estimates, however, Senator Murkowski raised some concerns about the accuracy of those estimates.

A link to witness testimony can be found here.

-MAR

Senate Committee on Energy and Natural Resources Summit to consider how to achieve a more secure, reliable, sustainable, and affordable energy future for the American people
September 12, 2008

Witnesses
Panel I
Professor John Deutch, Massachusetts Institute of Technology
Mr. Dan Reicher, Director of Climate Change & Energy Initiatives, Google.Org
Dr. Daniel Yergin, Chairman, Cambridge Energy Research Associates
Mr. Frank Verrastro, Director and Senior Fellow, Energy and National Security Program, Center for Strategic and International Studies
Mr. Marvin Odum, Executive Vice President, Shell Oil Company

Panel II
Mr. John Krenicki, Vice Chairman, President, and CEO, General Electric Energy Infrastructure
Mr. John Rowe, Chairman and CEO, Exelon Corporation
Mr. James Roberts, CEO, Foundation Coal Corporation
Mr. Douglas Steenland, President and CEO, Northwest Airlines
Mr. Gary Cohn, Co-President, Managing Director, and COO, Goldman Sachs
Mr. Richard Wagoner, Chairman and CEO, General Motors

Members Present
Senate Majority Leader Harry Reid (D-NV)
Senate Minority Leader Mitch McConnell (R-KY)
Chairman Jeff Bingaman (D-NM)
Ranking Member Pete Domenici (R-NM)
Byron Dorgan (D-ND)
John Thune (R-SD)
Maria Cantwell (D-WA)
Bob Corker (R-TN)
Mark Pryor (D-AR)
Saxby Chambliss (R-GA)
Ben Nelson (D-NE)
George Voinovich (R-OH)
Kent Conrad (D-ND)
Lisa Murkowski (R-AK)
Amy Klobuchar (D-MN)
Sheldon Whitehouse (D-RI)
Ken Salazar (D-CO)
Daniel Akaka (D-HI)
Mary Landrieu (D-LA)
Christopher Bond (R-MO)
Carl Levin (D-MI)
Bill Nelson (D-FL)

This summit was organized at the request of Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY) to discuss the “gang of ten” plan for compromise energy legislation. The plan now has at least 20 formal supporters from both sides of the aisle. The legislation would include expanded drilling and higher taxes on oil companies. Revenues would be used to help pay for extended renewable energy tax credits and investment in alternative energy and conservation. Coal-to-liquids plants and expanded nuclear power would also be part of the proposal.

Reid’s opening remarks highlighted the necessity for a bipartisan effort and he hopes the Senate will move forward with an energy bill next week. He recognized that there is no easy answer to our energy problems. “The only silver bullet we have is to decrease our consumption of fossils fuels” he said, identifying renewable energies and increased efficiency of automobiles, buildings, and appliances as key parts of a comprehensive solution. Reid suggested that “we view this not as a crisis…but as an opportunity” to reinvest in innovation. McConnell echoed Reid’s call for action, using several anecdotes from Kentucky to illustrate how high fuel prices are hurting Kentuckians and calling for an expansion of domestic offshore drilling. “Conservation alone is clearly insufficient,” he said, “we need to both find more domestic energy and use less.”

Chairman Jeff Bingaman (D-NM) reiterated that the purpose of this summit is to foster bipartisan dialogue about how to achieve a more secure, reliable, sustainable, and affordable energy future for the American people. Ranking Member Pete Domenici (R-NM) explained how this summit is, in part, a response to the relatively recent shift in public opinion that we need to rely more on our own fossil fuel resources. Several senators applauded and expressed appreciation for Domenici’s long-time commitment to energy issues during his 36 years of public service in Congress.

Frank Verrastro, the director of the Energy and National Security Program at the Center for Strategic and International Studies, described today’s energy market as “global and immense” with “uneven and increasing demand.” The world is 85-90 percent dependent on fossils fuels. Verrastro argued that “eliminating those fuels any time soon is impossible as we currently have nothing to replace them at scale.” He advocated that the U.S. drill in a selective and environmentally sound manner as one part of a comprehensive energy plan. Other important components of such a plan include improved efficiency, diversifying fuel sources, a renewed commitment to research and technology (including education), and setting an economy-wide price for carbon. Verrastro cautioned that energy independence should not be confused with energy security. No country is completely independent and to become so would be inconsistent with our foreign policy objectives.

Daniel Yergin, Chairman of Cambridge Energy Research Associates, began his testimony by summarizing a Time magazine article from 1973 that reported on an energy crisis similar to the one we are experiencing today. Yergin advocated for energy policy based on a long term vision independent of potential future fluctuations in the price of oil. Otherwise, we will find ourselves in the same crisis again and again. Long-term planning and steady funding support for energy research and development  (R&D) were consistently suggested by all of the witnesses to help the U.S. deal with our energy challenges.

Dan Reicher, Director of Climate Change & Energy Initiatives at Google, outlined a 4-step energy plan which included large scale modernization of the power grid and strong standards and incentives for reducing greenhouse gas emissions. He described a world in which smart meters, smart appliances, and smart policies like energy-use revenue decoupling would make people more aware and conservative in their energy use. Reicher advocated for increased funding for R&D, promising that it would “more than pay for itself.”

John Deutch, professor at the Massachusetts Institute of Technology, outlined a comprehensive energy plan which includes everything from the establishment of a charge for greenhouse gas emissions, to development of clean coal and carbon sequestration technologies, increased domestic oil and gas production, expansion of nuclear power use, and improved efficiency. In particular, Deutch highlighted the need to “accelerate the pace of energy innovation.” To achieve this, he suggested creating an Energy Innovation Council with a national energy research and development demonstration plan involving all government agencies and establishing a new career path for energy expertise within the civil service.

Marvin Odum, Executive Vice President of Shell Oil Company, testified that “we will need more of all types of energy, including that saved through efficiency and conservation.” He mainly focused on “the oil and gas side of this equation,” predicting that fossil fuels will remain critical energy sources. Odum told the committee that the U.S. is prepared to increase domestic production because it has well-designed systems for managing oil and gas exploration and for minimizing environmental impacts. In order for the U.S. to increase production, more areas be opened to exploration and production and adequate funding must be provided to agencies who manage those activities so that they can proceed in a timely manner.

All five panelists agreed that a successful solution must be comprehensive although they differed about the amounts of energy from different potential resources. Deutch, Reicher, and Verrasta were particularly in favor of reducing energy demand through efficiency and thus reducing the amount of all energy resources needed in the future. In Verrasta’s words, “If you double efficiency, $4 per gallon gas becomes $2 per gallon gas.”

There was unanimous agreement that drilling will be an important facet of any energy solution. At the very least, drilling for oil is important to support our transition to alternative energy sources and greater efficiency. Deutch also pointed out that by drilling we will show the international community “that we are doing our part to support supply.” Reicher cautioned against letting drilling distract us from pursuing other energy resources.

Bingaman, who is working on designing a Democratic energy plan with Senate Finance Chairman Max Baucus (D-MT), asked the panelists which alternative – electricity, biofuels, or natural gas – holds the most promise for replacing petroleum in the transportation sector. Reicher said he’d put “electrification of vehicles at the top of the list,” perhaps in combination with biofuels. Deutch pointed out biofuels will only be able to contribute a maximum of 2 billion barrels of oil equivalent per day, and so can only be a small part of any solution. He reported that we are currently importing natural gas, and so this option may not free us from our foreign dependence.

Senator John Thune (R-SD) asked the panelists to identify some ideas that would have the most benefits in the short term. Reicher and Yergin responded that efficiency holds the greatest promise over the short term. Yergin also emphasized it is important to explore many possibilities because it is difficult to predict what will have the biggest impact. Reicher suggested that geothermal is a particularly promising area of research and he advocated investment in making a heat map for the United States. Senator Sheldon Whitehouse (D-RI) asked panelists to identify some practical “quick fixes.” Ideas proposed by the witnesses include imposing a 50 mile per hour speed limit on highways, smart metering, and education for small and medium-sized businesses about what they can do to save energy.

Senator Ben Nelson (D-NE) asked if the U.S. has the capacity to build the 23 new nuclear facilities which have been proposed. Deutch reported that 20 plants would take 15 years. Part of the problem is that the U.S. has lost much of its expertise in this area. Another issue is the lengthy licensing process. Nelson followed up by asking if there should be one agency to deal with all nuclear activities. Deutch responded that he believes that the authority of Federal Energy Regulatory Commission (FERC) should be expanded.

Senator Mark Pryor (D-AR) told the committee that, in terms of drilling, the “gang of ten” is focused on opening select areas where significant infrastructure already exists. He asked Odum if this is a good idea and how much new drilling the industry can handle over the next 7 years. Odum responded that although the industry stressed in terms of infrastructure, its ability to respond to increased demand should not be underestimated. For example, there are 30 deep-water rigs around the world today and there will be almost triple that amount by next year.

Senator Saxby Chambliss (R-GA) questioned Odum as to whether the U.S. needs new refineries. Odum confirmed that Shell is putting significant investment into new refineries. However, most of these “new” refineries are actually expansions in areas where refineries already exist. Attaining permits to build refineries in new locations is difficult.

The second panel was composed primarily of corporate leaders and the testimony and discussion revolved mostly around the special interests of each panelist’s company. Gary Cohn, co-president and managing director of Goldman Sachs, also talked a lot about economic theory. What follows are a couple parts of the discussion that may be of most interest to the geoscience community.

Senator Amy Klobuchar (D-MN) asked the panel about the status of battery technology. Richard Wagoner, chairman and CEO of General Motors, explained that the most advanced technologies are being developed outside the U.S. and that we are “way behind.” He pointed out that this means there are lots of business opportunities in this area and encouraged congress to fund battery research.

Senator Kent Conrad (D-ND) asked the panel if the “gang of ten’s” proposed initiatives are in line with what the panelist think. The panelists all affirmed that they support the “gang of ten’s” initiatives. James Roberts, CEO of the Foundation Coal Corporation, emphasized that coal would be a significant part of any solution. Douglas Steenland, president and CEO of Northwest Airlines, pointed out that airplanes depend on oil so they are most interested in expanding drilling. Cohn  and Wagener both stressed the importance of a “persistent commitment” to be able to attract the capital necessary to invest in alternative energies and new technologies.

A link to witness testimony can be found here.

-MAR

House Select Committee On Energy Independence and Global Warming Hearing “What's Cooking with Natural Gas: Hearing to Examine Fuel's Role in Global Warming Solutions”
July 30, 2008

Committee Members Present
Chairman Edward Markey (D-MA)
Earl Blumenauer (D-OR)
Hilda L. Solis (D-CA)
Stephanie Herseth Sandlin (D-SD)
Emanuel Cleaver (D-MO)
John Hall (D-NY)
Ranking Member F. James Sensenbrenner, Jr. (R-WI)
Greg Walden (R-OR)
John Sullivan (R-OK)
Marsha Blackburn (R-TN)

Witnesses
Aubrey McClendon, CEO, Chesapeake Energy
Mark Smith, Executive Director, Independent Petroleum Association of Mountain States Clay Harris, CEO, Suez LNG North America
David Manning, Executive VP, National Grid
Rich Wells, Vice President Energy, The Dow Chemical Company
John German, Manager Environmental and Energy Analysis, American Honda

The Select Committee on Energy Independence and Global Warming held this hearing to examine the current role of natural gas in the economy and the role it could assume in a clean energy future.

Often thought of as ‘the prince of fossil fuels,’ said Chairman Edward Markey (D-MA), natural gas plays a crucial role in America’s economy. Markey, along with a handful of other members, noted that natural gas combustion produces half the carbon dioxide emissions of coal and a third of the emissions of oil. Along with Markey, Earl Blumenauer (D-OR), Ranking Member James Sensenbrenner (R-WI), John Hall (D-NY), and Emanuel Cleaver (D-MO) extolled the fuel because it is cleaner burning than its coal and oil counterparts. Additionally, Markey mentioned that the rise in natural gas demand and the fuel’s corollary price increase (now, it sells for two to three times higher than it did at the beginning of the decade), exploration and extraction of natural gas reserves once dismissed as not economically viable are being undertaken. Natural gas may help to transform our economy to an environmentally friendly one, Markey concluded, but we should be mindful that it is a finite resource and contributes to global warming.

Sensenbrenner pointed out that, in addition to producing less carbon dioxide upon combustion, natural gas produces “negligible amounts of nitrogen oxides and sulfur oxides.” The U.S. should be using more of “this useful fuel,” he claimed, and urged Congress to open more lands to natural gas leasing. He said there are 420 trillion cubic feet of natural gas on the outer continental shelf, but 85% of this reserve cannot be touched due to the congressional moratorium on drilling there. “Increasing the domestic supply of natural gas will benefit the economy and the environment,” Sensenbrenner added, also citing Energy Information Administration (EIA) predictions that the cost of natural gas will increase 40% this winter.

Blumenauer, echoing Markey, referred to natural gas as a “bridge” fuel, and one that provides flexibility to its users. He said, too, that we “have to do a better job of conserving this resource,” with some conservation coming from the capture of natural gas presently being flared off. To the witness panel, he posed the question: how do we reward producers and companies for conserving natural gas?

Representative Marsha Blackburn (R-TN) referred to natural gas as “important to the portfolio” of energy supplies needed to power the American economy and, like Sensenbrenner, expressed concern that Congress is not “addressing the supply issues.”

Statistics that Congresswoman Hilda Solis (D-CA) mentioned seemed to downplay the amount of natural gas lands unavailable for production. She said the U.S. boasts 3.4% of the global supply of natural gas, and 2% is available for leasing. She brought up the California earthquake on July 29, saying she is worried about liquefied natural gas (LNG) safety and containment in California, a tectonically active state.

Congressman Greg Walden (R-OR) said he is concerned primarily with the availability and affordability of energy resources and is anxious for the Americans who feel “shell shock at the pump [and] will feel it when they get their home heating bill.” Walden bemoaned the fact that, with the recent spike in natural gas prices and because natural gas is used in fertilizer production, farmers in his district are paying double for fertilizer. Likewise, Stephanie Sandlin (D-SD), who represents an agricultural district, said “farmers talk about the need to increase the supply of natural gas because of its fertilizer component.”

Representative John Sullivan (R-OK) was enthusiastic about domestic natural gas’s ability to reduce America’s dependence on foreign oil and for its contribution to energy security. In his opening statement, Sullivan also advocated for the lifting of the congressional moratorium on drilling in the Outer Continental Shelf.

Congressman Hall  called natural gas “the forgotten fuel,” but said, too, that it shouldn’t be viewed as a “cure-all” for our energy issues. Nonetheless, Hall said, we should pursue natural gas intently because the “U.S. has more of the world’s gas than oil reserves.” Congressman Cleaver  spoke of natural gas similarly, saying we should “look at natural gas as a temporary solution.” For a sustained clean energy economy, however, natural gas won’t be sufficient because natural gas supplies are finite, “lasting only until they’re gone.”

Aubrey McClendon began his testimony by saying that, according to a recent study by the American Clean Skies Foundation, America’s natural gas reserves should last for at least the next 100 years. He was also eager to report that natural gas producers have now learned how to extract natural gas from shale gas reservoirs. Because of this breakthrough, he affirmed “America is at the beginning of a natural gas boom.” McClendon believes the Haynesville Shale, a formation located in east Texas and Louisiana, will become America’s largest gas field, stating it could meet America’s gas needs for 20 years.

McClendon also urged Congress to provide incentives for more extensive use of compressed natural gas (CNG). He suggested Congress incentivize the conversion of technologies that run on oil to run on natural gas. “Nothing less than the American way of life is at stake,” McClendon said. His testimony pointed out that, while domestic natural gas supplies currently account for 86% of our total gas supplies, domestic oil supplies account for just 33% of our total oil supplies; McClendon said switching to domestically produced natural gas is a matter of national security, and he was confident that American natural gas producers would be able to meet demand if natural gas assumed a more prominent role. McClendon concluded by saying “freedom from foreign oil leads us from the energy wilderness to a clean energy future.”

Mark Smith spoke on behalf of more than 400 independent oil and natural gas producers in the Intermountain West—which encompasses Montana, Wyoming, Utah, Colorado, and New Mexico. He avowed the Intermountain West “is best poised to help the U.S. meet its near and mid-term energy needs.” The region presently supplies over 25% of America’s natural gas and over the last decade, gas production in the region has grown about 50%. In the coming years, natural gas producers in the region will need access to lands that are currently inaccessible, Smith said.

Smith advocated for a lifting of the congressional ban on drilling on the Outer Continental Shelf. He opposed the recent legislation that would require companies to return leases they currently have if they are not actively exploring in the region. He declared this “use it or lose it” policy “the wrong approach”. He suggested instead that Congress should increase the budget of the Bureau of Land Management (BLM) to aid natural gas exploration. He also discouraged Congress from creating wilderness areas that may contain economical natural gas, saying “consider how the creation of wilderness areas will affect leasing attempts.”

Clay Harris presented testimony regarding the role of liquefied natural gas (LNG).Harris said LNG can contribute substantially to a region’s energy supply and highlighted the flexibility LNG provides over natural gas in gas form. When sites of natural gas production are distant from markets, it is more cost effective to convert the gas to LNG; “liquefying natural gas and shipping it is more economical than transporting it in pipelines for distances of more than about 700 miles offshore or more than 2200 miles onshore,” Harris claimed. However, he went on, LNG cannot meet all our needs for natural gas. “LNG needs to be thought of as complementary to our current resource base,” Harris said.

Manning’s testimony noted “natural gas has increasingly become the ‘fuel of choice’ for new power plants” because these plants are cleaner than coal plants. The combustion of natural gas has much lower emissions of carbon dioxide, NOX, and SOX and emits no mercury at all. Not only are gas-fired plants clean, said Manning, but “these state-of-the-art gas-fired plants are efficient…[and] combined cycle or co-generation plants have dramatically improved the heat efficiency and reduced emissions per unit of power purchased.”

Rich Wells spoke to how increasing natural gas prices, and increasing energy prices in general, are impacting companies like Dow Chemical Company. Dow uses the equivalent of 850,000 barrels of oil per day. The rising price of natural gas—Wells said the price of natural gas has increased 460% in the past eight years—is “having a big effect” on operations at Dow. Dow is energetically pursuing energy efficiency projects. But more than that, said Wells, the “high and volatile cost of natural gas has discouraged Dow from expanding in the U.S.” Rather, the company is expanding overseas, in countries such as Brazil.

John German discussed Honda’s compressed natural gas vehicle, the Civic GX, which is the only natural gas-powered car available on the U.S. market. He said natural gas vehicles are “important near-term technologies,” adding natural gas vehicles will “serve as a pathway to hydrogen cell vehicles.”

Witness testimony can be accessed here.

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Full Senate Committee On Energy and Natural Resources Hearing “The Challenges to Meeting Future Energy Needs and Developing Technologies for Meeting Increased Global Energy Demand in the Context of the Need to Address Global Climate Change”
June 25, 2008

Committee Members Present
Chairman Jeff Bingaman (D-NM)
Ken Salazar (D-CO)
Robert Menendez (D-NJ)
Blanche Lincoln (D-AR)
Ranking Member Pete Domenici (R-NM)
Larry Craig (R-ID)
Lisa Murkowski (R-AK)
Bob Corker (R-TN)
John Barrasso (R-WY)
Jeff Sessions (R-AL)

Witnesses
Panel 1
Dr. Neil Hirst, Energy Technology and R&D Director, International Energy Agency (IEA)
Dr. Raymond Orbach, Office of Science Director, Department of Energy (DOE)

Panel 2
Dr. Thomas Wilson, Senior Program Manager, Electric Power Research Institute
Dr. Raymond Kopp, Senior Fellow, Resources for the Future
Mr. Karan Bhatia, Vice President and Senior Counsel, General Electric Company

During this hearing, the committee received testimony on the challenges of meeting America’s future energy demand against the backdrop of global warming.

It’s been 20 years since Dr. James Hansen first testified before Congress that global temperatures had exceeded their range of natural variability, Chairman Jeff Bingaman (D-NM) began in his opening statement, yet Congress has not seriously pursued low-carbon technologies. “We have failed to sustain support for the promising energy technologies that could have decreased our dependence on fossil fuels,” he said. He then mentioned key findings from the International Energy Agency’s (IEA) recently released report. According to the report, Bingaman said, moving from a fossil-fuel based economy to a clean energy economy will cost about $45 trillion dollars and require the deployment of a full range of technologies from carbon capture and sequestration (CCS) to concentrated solar power. Bingaman concluded that private sector investment in clean energy technology must be encouraged with tax incentives, and research in “promising energy technologies” must be better funded. “Today, our funding for energy technology is only half of what it was 25 years ago.”

In his opening remarks, Ranking Member Pete Domenici (R-NM) linked increasing carbon dioxide emissions, “which we want to control because of the long term Earth problem” and America’s dependence on foreign oil, “which causes me to have the greatest fear for our country I have ever had.” He then conveyed support for the opinions expressed in an Albuquerque Journal editorial, which claimed “unless Congress expands domestic oil supplies, there will be major economic destruction before we see effects from global warming.” Domenici also urged Congress to support coal-to-liquid technology, saying “you better not throw that approach away.”

Dr. Hirst testified to the conclusions of the IEA’s publication Energy Technology Perspectives 2008. The report was commissioned by the leaders of the G8, who addressed climate change, a clean energy future, and sustainable development at their 2005 summit. In general, said Hirst, “the report shows how we can use technology to achieve really deep cuts in global carbon dioxide emissions and…ease the pressures on energy markets.” The IEA’s analysis “is based on extensive analytical and modeling work” and drew on the work of many experts, Hirst reassured the committee.

The analysis sought to determine what would be required to sustain carbon dioxide emissions at their current levels in 2050 for, according to a ‘business as usual’ scenario,  emissions will be 130% greater than they are at present by 2050. According to the Intergovernmental Panel on Climate Change (IPCC), said Hirst, these cuts would be necessary to contain warming to within 2-3 degrees Celsius.

Hirst said that to simultaneously “de-carbonize” energy generation and provide the energy America will demand, every year between now and 2050, the U.S. must build: 35 coal plants with CCS, a 1 gigawatt nuclear plant, and 14,000 wind turbines. “We do not have a choice here. We need to do all that,” he emphasized. The energy security benefits of this “global technical revolution” would be substantial, Hirst claimed. He said that by 2050, oil demand would be 27% below its 2005 level.

In addition to the power sector, Hirst discussed energy efficiency and transportation. “There is a lot of potential for carbon abatement through efficiency” said Hirst, noting that industrial processes, appliances, homes, and especially vehicles could all be made more efficient. Hirst stated that, in some scenarios, up to 36% of energy savings can come from electricity and fuel efficiency. As for transportation, Hirst repeated multiple times that it is impossible to “know what the dominant technology will be in 2050”; he said, however, that to achieve the emissions targets, there can be no internal combustion engine vehicles in 2050. He said, too, that “ethanol from gain will need to be phased out.”

Though the U.S. is a world leader in R&D for energy technologies, Hirst affirmed, energy R&D accounts for just 3% of total R&D. He further pointed out that the R&D spending trend is downward. “Clearly this trend is incompatible with energy policy ambitions and the need for an energy technology revolution,” Hirst said.

Dr. Orbach provided an overview of the Department of Energy’s (DOE) current energy technology research programs and its research goals for the future. Presently, said Orbach, there is inquiry into a number of potential new ways to generate energy and improve existing technologies. The research he highlighted is research into: solar photovoltaics that exceed thermodynamic efficiency limits; the direct conversion of sunlight to chemical fuels; a carbon-neutral biofuels economy to supply over 30 percent of U.S. transportation fuel needs without competing with food, feed, or export demands; a closed nuclear fuel cycle; and fusion, or “bringing the power of the sun and the stars to Earth.”

“Incremental improvements in our current technologies will not be enough to meet this challenge,” Orbach said, “we will need transformational breakthroughs in basic science that will fundamentally change the rules of the game.” Orbach discussed the need for breakthroughs in CCS, renewable energy technology, and nuclear fission as well as nuclear fusion, which he said is still “farther off.”

During the first question and answer period, several committee members questioned the strength of the IEA’s model. Senator Bob Corker (R-TN) asked “How much time went into collecting the data?” Hirst replied that the model was developed over a 6-7 year period and that the utilized data was provided by “thousands of experts from around the world.” Senator Ken Salazar (D-CO) asked “How good is the model?” Hirst said it is “quite a good model.” Senator Larry Craig (R-ID) inquired into whether or not the model is “reflective of rapidly transforming markets,” and Hirst answered that the model incorporated assumptions about future oil prices while accounting for the trend toward increasing efficiency. Senator Jeff Sessions (R-AL) was disparaging of the model and the IEA, calling the organization “some salon in Europe.” 

Senator Lisa Murkowski (R-AK) reported to the committee and witnesses that small Alaskan villages are experiencing “a full blown energy crisis” where, because families are spending all of their income on fuel, they cannot afford to pay their water and sewer bills. “Human waste is carried outside and dumped in the ground,” she said. In response, Orbach said “We are used to thinking about huge, centralized facilities.” He encouraged the committee to think small scale for electricity and heat generation, saying “small towns can have on-site processing plants.” Senator John Barrasso (R-WY) wanted to know “how can we reduce global energy prices?” Hirst asserted that lower energy prices would be achieved with “the lowest cost technology.” He said his “greatest fear,” though, is “in the absence of policies, the high carbon rather than low carbon” energy resources will be used.

The Electric Power Research Institute (EPRI), which Dr. Wilson represented, has performed research on the role of technology in addressing climate change. An analysis EPRI released in 2007 addressed the technical feasibility associated with two scenarios of carbon dioxide emissions reductions for the electricity sector as well as the economic implications of meeting these emissions targets. Though the models used by EPRI and IEA possessed different methodologies, Wilson drew parallels between them, saying “the key findings of the EPRI and IEA analyses are strikingly similar.  Significant reductions in emissions are possible, but they require fundamental technological change.” Wilson’s policy recommendations were “immediate investment in more R&D as well as the commitment to deal with regulatory, siting, and public perception issues.”

Dr. Kopp vocalized support for the IEA report, saying it “reflects a good deal of our collective understanding of the challenges posed by climate change.” Kopp emphasized certain analysis findings, including the conclusions that a carbon price is essential to incentivize conservation and technology development and that government R&D spending on energy technology needs to be increased. He also reiterated the IEA report’s finding that, as far as energy technology is concerned, “there is no silver bullet.”

In his testimony, Kopp urged the committee to begin troubleshooting issues arising from the implementation of CCS, such as the selection of storage sites and the creation of a carbon dioxide-transport infrastructure. Kopp also noted that the transmission of electricity generated by wind and solar technologies at a distance from electricity load centers needs to be accommodated with “carefully planned grid expansion” since “the current U.S. grid is not designed to take full advantage of western or offshore wind [and solar] resources.” Finally, said Kopp, the U.S. should create policies that “alter the economics of land use to make a standing forest more valuable than alternative uses of the land.” More standing forests will sequester more carbon dioxide, Kopp noted.

The threat posed by climate change, said Mr. Bhatia, “requires a concerted response from both governments and the private sector.” Bhatia spoke about ways to bolster the government-industry partnership, a partnership “essential to solving the global climate challenge.” He said General Electric advises “continued protection of intellectual property rights as necessary to advance the development of technology; elimination of trade barriers, including tariffs, to cleaner energy technologies; and coordinated promotion of cleaner energy exports.”

Bhatia called the IEA report “a carefully documented analysis” and, like Kopp and Wilson but unlike a handful of senators, regarded the analysis and report highly.

-LMB

Full Senate Committee On Energy and Natural Resources Hearing To Examine the Challenges and Regional Solutions to Developing Transmission for Renewable Electricity Resources
June 17, 2008

Witnesses
Panel 1
The Honorable Harry Reid – Member, U.S. Senate

Panel 2
The Honorable Kevin Kolevar, Assistant Secretary for Electricity Delivery and Energy Reliability, United States Department of Energy
Mr. T. Boone Pickens, Founder, BP Capital
Mr. Rich Halvey, Program Director for Energy, Western Governors’ Association
Mr. Bryce Freeman, Board Member, Wyoming Infrastructure Authority

Panel 3
The Honorable Gary Hanson, Chairman, South Dakota Public Utilities Commission
Mr. Stephen Wright, Administrator, Bonneville Power Administration
Mr. Will Kaul, Transmission Vice President, Great River Energy
Mr. Don Furman, Chairman of Transmission Committee, American Wind Energy Association, Senior Vice President of Business Development, Transmission and Policy for Iberdrola Renewables

The hearing concerned the inadequacy of current electricity transmission lines in handling new renewable energy sources. A series of recent reports including those by the Department of Energy (DOE), the Western Governors Association (WGA), and Project 25x25 indicate there is greater capacity for solar, wind and other renewable energy sources on the U.S. electricity grid. For example, the DOE report states 20% of U.S. electricity could come from wind alone. The WGA proposes a goal that by 2015 they  add 30,000MW of clean energy capacity to the 9,134 MW they presently have, and Project 25x25 sets a national goal for 25% of energy in 2025 to come from renewables.

In his opening statement, Chairman Jeff Bingaman (D-NM), noted that despite the potential for renewable electricity highlighted in the reports, currently “renewable generation is still only about three percent of our national electricity supply.” He observed that all the reports suggested current policy was not enough to bolster renewable electricity generation and “one of the most important barriers…is the inadequacy of the existing transmission system.”

Ranking member Pete Domenici (R-NM) noted that while we have only seen meager developments in electricity transmission, electricity demand is expected to increase by 30% over the next 30 years according to a report by the Energy Information Administration (EIA).

The uneven geographic distribution of renewable energy supply areas, which are often not near areas of high electricity demand suggests the need for consistent policy and wise planning across states and jurisdictions. Issues discussed by Bingaman and Domenici for creating effective transmission systems include: planning, siting, cost allocations and intermittent sources.

Senator Harry Reid (D-NV), speaking as a panelist, felt strongly that “it is time for the federal government to take a much more constructive role, particularly since industry has not yet risen to the challenge.”  According to Reid, in the past few decades, transmission investments have been mostly in decline and in “1998 companies spent half of what they did in 1975” on grid maintenance resulting in a “brittle and insecure power grid”. He quoted a Brattle Group report which estimates “the nation will need $900 billion for transmission and distribution by 2030.”  To address this problem Reid introduced legislation (S. 2076), that “directs the President to identify and designate zones where renewable energy resources can generate at least 1,000 megawatts of electricity.” It also provides new financing options for constructing transmission lines and connecting remote energy generation areas to the current power grid. Reid sees this investment as a major opportunity, noting the “total solar thermal potential in the Southwest could generate 7 times the U.S.’s current electricity capacity.” 

Mr. Kevin Kolevar, assistant secretary of DOE’s Office of Electricity Delivery and Energy Reliability (DOE OE) testified regarding DOE’s efforts to “harmonize the multitude of local, state and federal regulatory rules such that they complement, not conflict with each other.” Kolevar advocated the importance of a regional approach and DOE’s focus on the designation of Renewable Energy Zones (REZ), which delineate comprehensive regional systems for renewable energy generation and transmission. Kolevar mentioned that “renewable resources, such as water power, geothermal, bio-power, and distributed solar (or solar photovoltaics) may not be needed to be identified as existing in a “zone”, or at least may be able to serve nearby load without new transmission.” However, Kolevar noted that for large scale projects in solar, wind, nuclear, clean coal and in general “if you want to support clean energy, you have to support transmission expansion.”

Mr. Pickens of BP Capital, predicted: “Private enterprise will invest money, and will build new transmission infrastructure cheaply and efficiently, if Congress adopts clear, predictable policies.” Pickens believes there is a great incentive to switch to more domestically controlled energy sources: “Seventy percent of the oil we use is imported. With current oil prices, we are getting close to exporting $700 billion a year overseas because of our addiction to imported oil.” Pickens estimates that 38% of U.S. foreign oil imports could be eliminated by using renewables. By using renewables for electricity generation, the U.S. would not need to use any domestic natural gas for electricity and this fuel could then be used for transportation, reducing foreign oil exports. Additionally he views natural gas as being a “clean, abundant, affordable and domestic” fuel. His testimony continued with a detailed discussion of the major barriers in renewable transmission and suggestions for their resolution including: siting authority, federal lands, federal permitting, financial incentives and equal allocation cost and recovery. Fair cost and recovery would entail spreading the costs of transmission across many consumers.
Mr. Halvey, Energy Programs Director at the Western Governors’ Association and project manager for the Western Renewable Energy Zones (WREZ) project, a project involving 11 states and areas of Canada and Mexico, thought that WREZ, a regional approach to renewables, could serve as a model for other projects. WREZ is currently working with DOE to locate areas and assess costs for renewable production and transmission and to map the most feasible locations for development.
Mr. Freeman, Administrator for the Wyoming Office of Consumer Advocate and board member of the Wyoming Infrastructure Authority, testified on the state’s efforts to expand transmission infrastructure, including the granting of state bonds to finance investment. He wanted the federal government to assist renewable development by reassuring utilities of the economic viability of intermittent resources and by providing cost reducing incentives and tax exemptions. Additionally, he would like to see the Federal Energy Regulatory Commission (FERC) become more receptive to experimental models.

Mr. Hanson testified on the different funding mechanisms used to pay for transmission and discussed the pros and cons of each.  He prefers what he calls a “highway/byway” system referencing local license plate rate zones and described in more detail in his written testimony. He told the panel he would like to see a standard tariff defining who pays for the service in advance and not on a case by case analysis of each specific facility.

Mr. Wright of the Bonneville Power Association (BPA) testified that a number of reports show that energy generation capacity alone is not sufficient to warrant construction due to high transmission costs and the present inability of renewables to offer consistent power at times of peak demand. Until technologies for energy storage come online, it is necessary to have a diversified energy supply with renewables offsetting “dedicated and dispatchable firm resources such as natural gas and coal.” Wright believes improving the geographic range of renewable sources (a regional approach), rather than concentrating generation to a specific location, will improve reliability.

Mr. Kaul, president of WIRES, a national coalition of transmission providers and customers and the founder and chairman of CapX 2020, a collaboration of ten utilities, testified on the efforts of his organization to coordinate planning and regulation requirements for grid expansions in Minnesota. In 2007, Minnesota passed a law requiring all utilities to generate at least 25% of their electricity from renewable sources by the year 2025 and by having a renewable energy goal and timeline the group prioritized its transmission line expansions. Kaul discussed regulatory reforms instituted by the state to facilitate progress in new transmission including: streamlined permitting, predictable revenue recovery, and the ability to transfer assets. He mentioned the federal government’s goal, but noted the regional policy faces its own challenges including “political jurisdictions, multiple transmission providers, conflicting energy policies and differential economic benefits” .

Mr. Furman, senior vice president of business development, transmission and policy for Iberdrola Renewables, a company involved in the development and operation of wind and solar electric generating facilities, testified that the investments of his company are contingent upon federal policy.  Furman stated that if the renewable energy tax credits now in place are extended, his company “plans to invest at least $8 billion between now and 2010 in wind and solar energy projects located in the United States”. He mentioned that the “lack of a long-term stable policy structure has hampered the environment for investments” and went on to remind the senators that the energy production tax credit (PTC) “has expired on three separate occasions and has never been extended for longer than a three year period.” Congress, he recommended, should “consider more stable long-term policies, including the adoption of a national renewable portfolio standard (RPS)”. 

Furman further stated that the lack of sufficient transmission creates major inefficiencies in the energy market, and that “transmission congestion limits the ability of utilities to access cheaper sources of generation that may be located some distance away.  Congestion also limits fuel diversity. New transmission capacity typically enables a utility to access lower cost generation – which makes up a much larger portion of consumer electric costs -- and thereby the transmission more than pays for itself.” He notes that for investment in the transmission system as recommended in the DOE report, the cost would average $0.50 per customer on an average bill, what he considers, “a small cost with big impacts.” His priority list for remedying current concerns in transmission expansion are: create sufficient incentives, ensure a fair allocation of recoverable costs, prevent states from unfairly inhibiting the process, encourage the DOE and FERC to support the process and use greenhouse gas legislation to recognize the contribution transmission can make towards their reduction. He concluded, “There are plenty of dollars to invest in the system”.

In the question and answer period some general topics discussed included production tax credits (PTC) to help encourage private capital development, the designation of national energy corridors, and reforms in how to designate costs. Senator Gordon Smith (R-OR) showed a particular interest in the areas of natural gas, wave and tidal energy. Mr. Pickens was asked how much he estimated the costs of moving 200,000 MW where it needed to go and replied with a figure of $70 billion which he called “miniscule”.  Senator Bryon Dorgan (D-ND) joked that though there was a need for more investment in enabling technology and grid storage the last person who asked for more funding was fired. The panel then emphasized the importance of PTC to entice private industry to make investments and stressed that if PTC became policy they should be able to be “counted on for decades”.  Most poignantly perhaps, was a discussion as to whether it would be useful to create a Federal Renewable Energy Standard and for Congress to prescribe a goal. Mr. Pickens replied most vocally to the senators “You have to do it!”

-JL

House Committee on Natural Resources Subcommittee on Water and Power Oversight Hearing on “Hydropower: Providing 75% of America’s Current Renewable Energy. Exploring its Role as a Continued Source of Clean, Renewable Energy for the Future”
June 12, 2008

Witnesses
Panel I
Bob Morton, Senator, State of Washington
Bob Johnson, Commissioner, Bureau of Reclamation, Washington, DC
Dr. Howard Gruenspecht, Deputy Administrator, Energy Information Administration (EIA)
Melinda Eden, Oregon Council Member, NW Power and Conservation Council
 Glenn English, Chief Executive Officer, National Rural Electric, Cooperative Association

Panel II
Scott Corwin, Executive Director, Public Power Council
Richard Roos-Collins, Director of Legal Services, Natural Heritage Institute; Chairman, Governing Board for the Low Impact Hydropower Institute; General Counsel, Hydropower Reform Coalition
Bruce Howard, Director for Environmental Affairs, Avista Utilities
 Tim Culbertson, General Manager, Grant County Public Utility District

The focus of this hearing was the role that hydropower currently plays in national and regional energy portfolios as well as the role that hydropower will play in America’s future energy portfolio. Ranking member Cathy McMorris Rodgers (R-WA) requested the hearing to spotlight hydropower as “one of the most promising renewable energy technologies.”

In her brief opening statement, subcommittee Chairwoman Grace Napolitano (D-CA) expressed support for hydropower and McMorris Rodgers called hydropower a “success story” in her opening remarks. McMorris Rodgers discussed hydropower in the context of her home state of Washington, stressing the fact that while much of the U.S. is dependent on coal for electricity, two-thirds of Washington’s electricity comes from hydropower. She also touched on concerns surrounding salmon and the dams, claiming that salmon thrive despite the dams. “Salmon survival is higher than it ever was,” she stated. “90% of adult fish navigate the dams successfully.”

Bob Morton, who is a Washington State Senator, provided testimony on the extent of hydropower development in the Pacific Northwest. According to Morton, there are 55 major hydroelectric projects on the Columbia, Snake, and Pend Oreille rivers and their tributaries. Morton said “there are some assumptions that hydropower in the Northwest is tapped out. That is simply not true.” To further harness hydropower, Morton suggested that smaller turbine technology in tributary streams be installed and the height of existing dams be increased. Additionally, Morton, like McMorris Rodgers, compared electricity generation from hydropower and coal in terms of greenhouse gas emissions, saying “according to the Northwest Power and Conservation Council, the average annual hydropower production in the Northwest is almost 144,000,000 megawatt hours. If those same megawatt hours would have been generated by conventional coal plants, more than 153,000,000 tons per year of additional greenhouse gases would have been emitted.”

Mr. Johnson further compared hydropower and other means of generating electricity, saying “each kilowatt hour of hydroelectricity is produced with an efficiency twice that of thermal sources.” Other benefits of hydropower include its flexibility and reliability, Johnson claimed. “Hydropower can rapidly change its output to match needs—going from no power generation to maximum power generation in a short period of time,” Johnson said. Johnson also mentioned the challenges that the Bureau of Reclamation is facing, including the increasing contentiousness of decisions on when to release water from the dams and the aging infrastructure.

Dr. Gruenspecht provided statistics on how hydropower fits into the energy portfolio’s big picture. He said that in 2007, conventional hydropower accounted for 71% of renewable generation, which amounted to 8% of all the power generated in the United States. Gruenspecht noted that from year to year, the amount of hydropower generation is variable. This variability is related to weather conditions, especially changes in precipitation and is responsible for the 139 billion kilowatt hour generation difference between the years of 1997 and 2001. Gruenspecht also discussed the future of hydropower. According to the Energy Information Administration’s (EIA) 2008 Annual Energy Outlook, Gruenspecht said, less than 1 gigawatt of new hydropower capacity is projected to be added by 2030, and generation is predicted to remain at about 300 billion kilowatthours. This forecast contrasts with the projected growth “of other renewable energy technologies over the same period,” said Gruenspecht. “By 2030, the 71% share of renewable power that hydropower currently holds falls to just below 50% of total renewable generation. Hydroelectricity’s share of total renewable generation is projected to decline because of the rapid rise in generation by other renewable technologies.”

Ms. Eden also talked about hydropower’s large contribution to the Northwest’s electricity supply. “The Pacific Northwest is hydropower country,” she said. Much of her testimony, however, was devoted not to hydropower but to another form of renewable energy—wind power—and to energy conservation. Wind power currently provides 4.7% of the Northwest’s  electrical power, said Eden, but “as the result of renewable resource requirements in three of the Northwest states, development of wind and other renewable power will increase. In fact, it is increasing rapidly already. Since 2000, wind power development has increased by 3,463 megawatts in the region.” Eden stressed the importance of energy conservation for meeting energy needs. “Conservation requires no fuel and produces no emissions,” Eden stated. “40% of the growth in demand in the Northwest has been met by energy conservation.”

Mr. English expressed concern that hydropower resources are almost exhausted but said “if we’re going to keep the lights on in this country, we’re going to need to use all the hydropower capacity in this country.” Like Morton, English proposed more development of small scale hydroelectric projects. “When it comes to dams, we’ve always thought ‘Big, big, big.’ We need to consider smaller projects,” English asserted. English repeatedly mentioned his opinion that the passage of climate change legislation is likely in the next administration. With the passage of such legislation, English said, generating electricity with hydropower will be even more attractive.

How climate change will affect the dams was a question fielded at the first panel. While Dr. Gruenspecht maintained that small changes in temperature and precipitation affect hydropower plants now and will affect them in the future, other witnesses were not sure of climate change’s impacts on the dams.

Hydropower, Mr. Corwin highlighted, was the first harnessed renewable source of power with origins dating back to “the waterwheel used to grind corn in ancient times.” Mr. Corwin also talked about hydropower’s modern role as the facilitator of other renewable energy resources. Corwin claimed that it makes sense to couple hydropower, which has a constant power supply, with other renewables, such as wind, which have intermittent power supplies. He said, “because of the variable nature of wind production, pairing it with hydropower is an effective method of creating a more reliable power supply.”

Mr. Roos-Collins, Mr. Howard, and Mr. Culbertson offered suggestions as to what future hydropower strategies should consider. Mr. Roos-Collins said “we need to retrofit the dam turbines to extract the maximum amount of power possible.” Howard pointed to hydrokinetic technologies that make use of the energy of river, tidal, and ocean currents, without the installation of new dams. Howard also said “federal support for hydropower R&D has been low in past years.” He expressed support for efforts to increase research and development in hydropower. Culbertson, too, conveyed support for funding requests for research on projects related to hydropower.

Ranking member McMorris Rodgers asked the second panel about the national capacity for small scale hydropower projects like low head hydropower as well as the capacity for dam retrofitting. Mr. Roos-Collins said that 200 megawatts of energy can be gained by making dams more efficient with new installments. When Mr. Howard noted that research has begun on ocean and tidal technologies but reiterated that more research, requiring more funding, is needed, Chairwoman Grace Napolitano said “we are cognizant that we need to invest in R&D.”

-LMB

House Committee on Natural Resources Subcommittee on Energy and Natural Resources Oversight Hearing on “Spinning Straw Into Black Gold: Enhanced Oil Recovery Using Carbon Dioxide”
June 12, 2008

Witnesses
Panel I
Mr. Timothy Spisak, Chief, Fluid Minerals Division, Bureau of Land Management
Mr. Scott Klara, Director, Strategic Center for Coal, National Energy Technology Laboratory

Panel II
Mr. Tracy Evans, Senior Vice President of Reservoir Engineering, Denbury Resources, Incorporated
Mr. William Roby, Vice President, Worldwide Engineering and Technical Services, Occidental Oil and Gas Corporation
Dr. Greg Kunkel, Vice President, Environmental Affairs, Tenaska, Incorporated
Dr. Ian Duncan, Associate Director, Earth and Environmental Systems, Bureau of Economic Geology, The University of Texas at Austin
Mr. Mark Demchuk, Team Lead, Weyburn, EnCana Oil and Gas Partnership

The hearing examined whether underground injection of carbon dioxide to increase domestic oil and gas production and reduce carbon dioxide emissions would be effective in alleviating energy supply problems and climate change. The process is known as carbon dioxide enhanced oil recovery (EOR) and uses carbon dioxide to force out remnants of oil and gas left in tapped reservoirs. In his opening statement, Chairman Jim Costa (D-CA) expressed support for “the opportunity to use this technology.” He noted that “all told, carbon dioxide EOR accounts for 5% of U.S. oil production, but according to some estimates, there are 80 billion barrels that are amenable to extraction using EOR.” Costa lauded carbon dioxide EOR for its environmental benefits, saying the method has the potential to sequester up to 13 billion tons of carbon dioxide in the U.S.. Finally, he noted that carbon dioxide EOR and carbon capture and sequestration (CCS) are linked techniques. “EOR will act as a bridge to CCS,” he said.

Representative Stephen Pearce (R-NM), the ranking member of the subcommittee, was less enthusiastic about CCS and EOR. In his opening statement, he remarked that “CCS on a commercial scale is still an unproven technology and remains cost prohibitive under current law.” He went on to say that passing legislation to expedite the widespread implementation of EOR technology would be unwise. He noted that Congress promoted the use of biofuels but is now regretting that it did so. He compared EOR legislation to biofuels legislation, insisting that legislation promoting EOR “would be misguided.” Rather than focusing on small-scale projects that will yield a little oil, Pearce went on, the U.S. should concentrate on major projects such as drilling in the Arctic National Wildlife Refuge (ANWR) and the Outer Continental Shelf. “There is no replacement for new oil field development,” he said. “The Committee should concern itself with how to increase domestic oil production. EOR is not a solution to our energy crisis. We need resources to keep our economy moving.”

Mr. Spisak provided background on EOR and CCS. He described the carbon dioxide EOR method, saying “EOR is a process used to recover more oil than can be obtained by natural pressure, through the injection of fluid or gas into an oil reservoir to force more oil to the surface. Carbon dioxide injection is one type of EOR.” As for CCS, Spisak said that while deep saline formations have the greatest potential for carbon dioxide storage, the gas can be injected into “all types of geological storage formations such as oil and gas fields…or coal beds.” Spisak also discussed the financial aspect of EOR. He noted that “in more recent times, it has become cost effective for industry to re-develop this field using modern technology and extract resources left behind after earlier efforts.” Spisak ended by saying that agencies in addition to the BLM, such as USGS, DOE, and EPA “will play an important role in recommending geologic criteria that could be incorporated into a set of ‘best practices’ for geologic [CCS] site selection.”

Mr. Klara began by saying that “our nation is still home to large fossil fuel reserves.” Yet, he said, “up to 70% of the oil in a given reservoir remains stranded after current production operations are completed due to technological and economic hurdles.” He also mentioned the role of carbon dioxide in energy discussions, saying “Carbon dioxide accounts for 80% of U.S. greenhouse gas emissions. Slowing the growth of anthropogenic greenhouse gas emissions has become an important concern.” Klara then asked, “what if we were to tie these two together?” Klara was enthusiastic about using carbon dioxide from power plants to extract oil, pointing out that the Intergovernmental Panel on Climate Change estimated 61-123 billion tons of carbon dioxide could be sequestered by using EOR.

In the first question and answer period, Representatives Costa and Pearce both expressed concern over the prospect of sequestered carbon dioxide seeping into abandoned oil wells, but Klara claimed that “the corrosive effects of carbon dioxide mixing with water aren’t more than what we deal with every day.”

Witnesses on the second panel testified to the obstacles involved with the use of EOR technology.

Mr. Evans highlighted the fact that the stream of gases produced from hydrocarbon combustion contains various quantities of carbon dioxide as well as impurities. “In order for carbon dioxide to be usable in EOR,” he said, “it must be injected in a relatively pure form.” Mr. Roby testified to the cost of utilizing EOR technology. He stated that while carbon dioxide flooding has increased Occidental’s oil recovery from the Permian Basin in West Texas by 25%, using carbon dioxide EOR in Occidental’s operations “increases the cost of recovering a barrel of oil by more than 50% over typical primary and secondary recovery operations.” Roby also said that a critical challenge facing expansion of the technology’s use is the cost of building the infrastructure to transport the carbon dioxide to an injection site and then compress it to a higher pressure.

Mr. Kunkel mentioned that his company, Tenasca, is developing a commercial-scale, coal-fired, baseload power facility that would capture up to 90 percent of its potential carbon dioxide emissions. Tenasca is anticipating climate change legislation and, in light of such legislation, believes CCS projects will be more attractive in the future. As for the present, “the economic incentives to build CCS projects aren’t there right now,” Kunkel said.

Other obstacles to the use of EOR and CCS technologies, Mr. Duncan noted, are the lack of new personnel trained in this area and the lack of a robust research program involving EOR and CCS. In his testimony, Duncan called for more graduate students to enroll in pertinent training programs. In the fields of economic and exploration geology, said Duncan, “most personnel are my age. We need more young personnel.” Duncan also called for more funding from the Department of Energy (DOE) for an aggressive research program.

Mr. Demchuk’s company has been injecting carbon dioxide underground for the past few years. He maintained that “storage of carbon dioxide in oil fields is safe.” According to the 3-D and 4-D seismic technology computer models EnCana Oil and Gas Partnership used to map and track carbon dioxide injections, “after 5,000 years, 99% of the carbon dioxide injected into the Weyburn oil field would still remain underground.” The Weyburn oil field is operated by EnCana and is located in Canada’s Saskatchewan province.

The second group of panelists, like Chairman Costa and the first group of panelists, was excited about carbon dioxide EOR. Indeed, Mr. Roby echoed an opinion in Costa’s opening statement when he claimed that carbon dioxide EOR technology represents “a gateway to larger carbon dioxide sequestration technologies.”

In the second question and answer period, Chairman Costa asked the group “Where do you see this all going?” to which Mr. Evans responded “carbon dioxide EOR is not going to have a huge impact on domestic oil production. It can have a meaningful impact, but it’s not going to turn the ship around. EOR’s bigger contribution will be to carbon sequestration.”

-LMB

Senate Full Committee on Energy and Natural Resources Hearing To Receive Testimony on the Domestic Energy Industry
November 6, 2007

Witnesses
Panel I
Ms. Emily DeRocco, Department of Labor
Ms. Patricia Hoffman, Department of Energy
Ms. Andra Cornelius, Workforce Florida

Panel II
Mr. Norm Szydlowski, Colonial Pipeline
Mr. Paul Bowers, Southern Company
Dr. Ray Stults, National Renewable Energy Laboratory
Ms. Carol Berrigan, Nuclear Energy Institute
Mr. Jim Hunter, International Brotherhood of Electrical Workers

Committee Members Present

Chairman Jeff Bingaman (D-NM)
Ron Wyden (D-OR)
Ken Salazar (D-CO)
Robert Menendez (D-NJ)
Ranking Member Pete V. Domenici (R-NM)
Larry E. Craig (R-ID)
Lisa Murkowski (R-AK)
Bob Corker (R-TN)
Jeff Sessions (R-AL)

United States energy needs are increasing while the industry is facing workforce decline. The purpose of this hearing is to understand what policies Congress can support to avoid an energy workforce shortage.

Ms. Emily DeRocco testified for the U.S. Department of Labor (DOL). She stated that within the energy industry, the average personnel age is over 50, and half the workforce will be of retirement age within five to ten years. A large portion of the potential workforce lacks the required interest and skills to work in the energy industry. Better comprehension of basic math, science, and technology is necessary to prepare people for these jobs. Ms. DeRocco asserted that the ability to quickly ascend the ranks through "career ladders" is needed to incentivize workers to start a career in the energy industry. The DOL has multiple initiatives and grants it uses to help bring personnel into these careers. Much of the work is done with community colleges, which are "well positioned" to know what the energy industry is looking for and what skills students need to learn. Ms. DeRocco believes Congress should support programs that encourage and reward innovation, promote public-private business partnerships, and increase industrial competitiveness.

Ms. Patricia Hoffman represented the Department of Energy (DOE), stating that the technology workforce is the "backbone of the economy". She agreed that Congress needs to address the workforce transition issue because a large percentage of personnel are about to retire. Ms. Hoffman applauded the nuclear sector for their cooperative research with universities because it gives students experience with the energy industry. Grants and mentor relationships are two of the most important ways that the energy companies can introduce students to the industry and possibly begin their careers. To alleviate the workforce issue, she recommended that Congress foster math and science education, support "strategic" engineering research, and promote better understanding of the industry.

Ms. Andra Cornelius of Workforce Florida, the state's workforce investment board, called the energy industry a "critical sector" in Florida and across the country. She recommended that Congress support legislation that will build effective partnerships, create and support policies that will help the U.S. meet its energy demands, and build a "talent pipeline" of new young workers with necessary skills and training for the energy industry. Training opportunities should begin in high school to reach young people that will not continue to college. She also indicated that any national solutions should make the workforce issue a priority, focus on bringing in and training new people, and reduce redundancy between efforts.

Chairman Jeff Bingaman (D-NM) asked to what extent the federal agencies (DOE, DOL and Department of Education) coordinate their efforts on the energy workforce issue. Ms. DeRocco stated that new efforts are much better coordinated and have reduced past redundancies. Many government organizations are now working on science, technology, engineering, and math education and workforce skills development.

Senator Bob Corker (R-TN) asked about efforts to bring in students at the college level, and specifically how to make the necessary classes appealing to students. Ms. DeRocco replied that colleges need to look at local economics and growth sectors and adjust their curricula to meet workforce needs to ensure job security for their graduates. She also noted the success of cooperative efforts with the National Science Foundation (NSF) to ensure that Ph.D. candidates are prepared for the workforce. Ms. Hoffman asserted that organizations must continue to stimulate interest at the high school level and encourage science and math education. She agreed with Corker that students need to be shown the relevance of majors, such as engineering, that will provide a career in the energy industry.

When asked what types of workers are needed in the industry, the panel replied that line technicians, pipe-fitters, electricians, and plumbers were among the highest in demand.

Climate change legislation is "spurring interest" in clean energy, for which a "whole new set of competencies and skills" are needed, according to Ms. DeRocco. Ms. Hoffman said the DOE currently does not have any clean energy workforce statistics, but there is a "huge potential" for careers in the industry. The National Academy of Sciences (NAS) is currently working on a study that will give industry projections. Senator Ron Wyden (D-OR) stated that clean energy will be a "huge magnet" for workers, and that the government should not give renewables and clean energy the "short end of the stick" by leaving them out of its efforts.

Senator Larry E. Craig (R-ID) asked how to make energy industry jobs attractive and desirable to young people. Ms. DeRocco replied that the DOL uses its Career Voyages website to promote these positions. She stressed the importance of meeting young people "where they are", by campaigning on the internet with tools such as Facebook and YouTube. Another issue is preparing young people for jobs in the energy industry. She is concerned that too often "we have not made education relevant to their work opportunities" in the industry.

Senator Lisa Murkowski (R-AK) asked if the government is spending enough money on job promotion and training to make a difference. Ms. DeRocco said that the DOL needs to focus on using the $15 billion yearly budget effectively on current needs first, and then see if additional funds are needed. She asked Congress to help align and appropriate funds correctly.

Senator Jeff Sessions (R-AL) asked how Congress could help young people that have finished high school and work in low-paying jobs with no visible desire to have a career. Ms. Cornelius replied that six out of ten high school students in Florida do not go to college, often because they do not want a "traditional learning environment". She asserted that these young people need to see the relevance of what they are learning in high school to the real world and their careers.

Senator Robert Menendez (D-NJ) said clean energy is and will continue to be a growing source of jobs in the U.S. energy industry. He asked what the DOL has done to ensure many of these positions go to people in underemployed communities. Ms. DeRocco said some of the grant programs the DOL provides are focused on clean energy jobs, and these do provide jobs in underemployed areas. But progress is very slow, and she believes now is the time to look at the marginalized workforce and add legislation to address this issue. Senator Menendez said the issue of workforce should have been addressed before and that the "current workforce didn't age overnight." Congress needs to learn from past mistakes so they do not repeat them.

Mr. Norm Szydlowski from Colonial Pipeline testified that within the petroleum sector 27% of employees are within five years of retirement. He suggested that Congress support policies that combine school programs with workforce needs, help decrease the "stigma" that keeps many people from working in some energy industry jobs, and address tax issues that force personnel into retirement while they are still an integral part of the workforce.

Mr. Paul Bowers testified that there is an ongoing decrease in the number of skilled workers in the energy industry, and the way in which this is addressed will affect the U.S. economy. In all, tens of thousands of employees are needed. He stated that educators, counselors, and parents no longer encourage technical skill careers. Educators and students need to be aware of these important, good-paying jobs in high demand, and high schools should give credit for technical skills classes. Mr. Bowers cited the Florida Career and Professional Education Act, which helps local educational systems to create technical training and certification programs, as a "perfect example" of what Congress can do to address the energy industry workforce problem.

Dr. Ray Stults of the National Renewable Energy Laboratory testified that many new clean and alternative energy power plants will be built in the next few decades, requiring huge amounts of technical labor to build and maintain. There is a projected shortage of technical workers, engineers, and scientists which is already affecting the energy industry. Dr. Stults asked Congress to continue its hearings and workshops on the subject.

Ms. Carol Berrigan of the Nuclear Energy Institute testified that legislation such as Energy Policy Act (EPAct) of 2005 and the America COMPETES Act is a good start to addressing energy workforce issues. New nuclear power plants are planned in the U.S., which will provide thousands of additional jobs. Ms. Berrigan suggested that Congress raise awareness of the workforce shortage, create partnerships between the government, industry, and education efforts, and implement new education-based training programs for the energy industry.

Mr. Jim Hunter testified on the state of the utilities sector, which is facing a "critical shortage" of personnel. There has been a steady decline in workforce for years, but a simultaneous increase in overall electricity generation. Hunter said this increase was due to huge amounts of overtime hours and little work done on maintenance. He stressed that new workers "must be hired and trained today" because it takes years of experience to be ready for many of the jobs that need to be filled. He stated that colleges were great resources for finding personnel, but those people need additional training to become skilled workers. He recommended Congress give funding assistance to training programs to prepare more employees for the energy industry.

Ranking Member Pete V. Domenici (R-NM) brought up President Carter's initiative that started training schools across the country to prepare young people for technical careers, and asked if the government should use a similar program now. Mr. Hunter replied that most energy companies train their workers internally, or sometimes in a partnership with community colleges. He said joint classes in community college can allow students to very quickly experience the industry and see if they want to pursue that type of career. Senator Domenici responded that he has considered creating an energy-worker training act to increase technical training schools and will give it further consideration.

Domenici asked the panel to promote the average salaries of energy industry jobs. Mr. Hunter said the average lineman makes over $100,000 each year. Dr. Stults said electricians make an average of $25-35 per hour or more.

Senator Murkowski addressed the stigma often associated with technical work, saying "we have got to change our attitude" about these jobs. While the No Child Left Behind Act of 2001 looked at important academic subjects for college, it did not address students who will not go to college. She asked if these students are receiving enough preparation in high school for careers in the energy industry. Mr. Bowers replied that all new employees at his company must take a basic math and reading test when they begin work, which 40% of them fail. Senator Murkowski stated that Congress needs to help ensure that students see how basic math skills can lead to a good-paying technical job.

The DOL and DOE currently have joint programs with schools to bring personnel into the energy industry. These programs are effective but more needs to be done. All witnesses acknowledged that an energy workforce crisis was likely, and came to a broad consensus about what Congress can do to help prevent it. The most important solutions are to reduce the stigma associated with technical jobs; promote jobs and workforce needs to high school (and younger) students, educators, and counselors; and to implement training programs and schools for technical skills. The committee has not yet presented any legislation on the subject, but shows interest in doing so.

A link to witness testimony can be found here.

-EAL

Senate Full Committee on Energy and Natural Resources Hearing on S.1543, A Bill to Establish a National Geothermal Initiative
September 26, 2007

Witnesses
Panel I
President Ólafur Ragnar Grímsson, President of Iceland

Panel II
The Honorable Alexander Karsner, Assistant Secretary for Energy Efficiency and Renewable Energy, U.S. Department of Energy
Dr. Mark Myers, Director, United States Geological Survey (USGS)

Panel III
Ms. Susan Petty, AltaRock Energy, Inc.
Dr. Lisa Shevenell, Mackay School of Earth Sciences and Engineering - University of Nevada
Dr. David R. Wunsch, New Hampshire Geological Survey
Dr. Kenneth H. Williamson, Geothermal Consultant

Committee Members Present

Chairman Jeff Bingaman (D-NM)
Daniel K. Akaka (D-HI)
Jon Tester (D-MT)
Ranking member Pete V. Domenici (R-NM)
Larry E. Craig (R-ID)
Lisa Murkowski (R-AK)
John Barrasso (R-WY)

As U.S. energy demands continue to increase, additional energy sources become progressively more important. Geothermal energy is one significant option because it uses natural geologic heat sources to heat, cool, and create usable energy without any hazardous by-products. The purpose of this hearing on geothermal energy is to understand the possibilities and limits of geothermal energy in the U.S. and to assess the value of Senate bill S.1543, entitled "National Geothermal Initiative Act of 2007" The main goal of the measure is to increase geothermal energy to 20% of overall U.S. energy production by 2030. The measure would help to achieve this goal by funding geothermal research and development through the Energy Department and supporting a survey of geothermal resources by the USGS. All federal funding for geothermal research and development was terminated in fiscal year 2007 and the last national survey of geothermal resources was published by the USGS in 1978.

Energy needs will only increase in the future, and with the concern of rising carbon dioxide levels and global warming, clean sources of energy will be in high demand. In their opening statements, all the senators expressed their interest in the topic and hope for the U.S. to increase its use of geothermal energy. Senators Daniel K. Akaka (D-HI) and Larry E. Craig (R-ID) informed the committee that Hawaii and Idaho have already utilized geothermal energy sources for decades. However, some senators expressed concern about the 20% goal, including Senator Lisa Murkowski (R-AK) who called it "ambitious" and Senator John Barrasso (R-WY) who referred to it as "unrealistic". The senators who attended the hearing did support greater use of geothermal energy resources in the United States.

Ólafur Ragnar Grímsson, the President of Iceland, testified on the extensive use of geothermal heat and energy in his country. He stated that the Icelandic energy system has been "transformed" from 80% coal and oil to 100% clean energy sources in the lifetime of a single generation. He believes that geothermal energy use will be good for the economy and security of the United States, and is cost-effective, reliable, clean, and flexible enough to meet the wide variety of needs in this nation. President Grímsson asserted that geothermal has "the most profit-making energy potential" of any renewable energy source, and is a base for many different business ventures.

He also highlighted the necessity of significant funding for interdisciplinary research and development to achieve geothermal energy goals. Countries such as China, Germany, India, and Russia are already using experts trained in Iceland to build geothermal heat and energy production facilities. President Grímsson said there is already a race between other countries to export scientists from Iceland with the necessary knowledge. Locations in the U.S. using geothermal energy will be "magnets" to businesses looking for clean, renewable, low-energy costs. A cooperative effort between the U.S. and Iceland could give the United States an economic and technological advantage in the pursuit of clean domestic energy sources.

The Honorable Alexander Karsner, Assistant Secretary for Energy Efficiency and Renewable Energy at the U.S. Department of Energy (DOE), believes geothermal energy is part of a "new era of energy security" for the U.S. The DOE has been working with experts on geothermal energy research. Assistant Secretary Karsner quoted an MIT study as saying that the 20% goal established in S.1543 "may be technologically unattainable" by 2030, although a much smaller percentage of U.S. energy generation may be feasible. Even if this specific energy goal cannot be met in the allotted time frame, he stressed that DOE believes geothermal energy plays an "important and growing" role in U.S. energy sources.

Dr. Mark Myers, Director of the USGS, testified that the U.S. needs to produce more energy to meet its growing needs. He believes that geothermal energy sources in this country are "incompletely developed or inadequately characterized" as a whole. Currently the USGS is conducting an assessment of 250 moderate and high-temperature geothermal energy sources which will be finished in 2008. Additional research authorization given by S.1543 would allow continued research of many types of geothermal energy, including traditional geothermal systems, enhanced geothermal systems, geopressured geothermal resources, and geothermal that is co-produced with oil and/or gas.

Senator Jon Tester (D-MT) expressed his concern that the DOE used data from the 1970s to make its predictions about future energy use and production. He said that "very little" was being done by the DOE that shows it is concerned about carbon dioxide release and global warming. Assistant Secretary Karsner responded that while more up-to-date data would be better, the data used was sufficient, and that none of the data available to the DOE suggests the goal stated in S.1543 will be obtainable. Senator Tester replied that research and development cannot move forward when researchers have an attitude that a goal is unattainable. He concluded by saying that while he understood that the DOE was bound to follow the guidance of the Administration, a new assessment of geothermal energy resources was necessary.

Ms. Susan Petty of AltaRock Energy, Inc. presented findings from a study on geothermal sources in the U.S. Currently only high-temperature, shallow-depth sites are viable, and harnessing energy is not economic across the whole U.S. But even with today's technological and funding limitations, a large amount of energy could be available. Other countries are ahead of the U.S. in geothermal energy use. Germany's first grid goes online soon, and Australia has 20 companies working on harnessing geothermal energy, while the U.S. has only one. If the industry continues to expand here like it has in other countries, federal lands with geothermal energy sources could be very profitable for the federal government as well as the county and state where the source is located.

Dr. Lisa Shevenell, a professor at the Mackay School of Earth Sciences and Engineering at the University of Nevada, testified on geothermal research from the past 24 years. She emphasized the need for longer-term policies, not "uncertain funding cycles" based on changing federal interest in the subject. Major universities need to be involved in geothermal research to help produce future geothermal energy specialists. Currently the funding is not available to keep training students in this field. If funding is decreased, this "growing industry will be reduced accordingly". She believes that now is the time to "aggressively pursue" geothermal energy in this country by increasing research funding.

Dr. David R. Wunsch, the State Geologist of New Hampshire, offered the Association of American State Geologists as an excellent resource for information about geothermal resources in the U.S. Currently less than one percent (<1%) of America's energy sources are geothermal, but the potential for direct heating and energy production are immense. The harnessing of these sources could be a major economic boon for the U.S. and enhance energy security. Dr. Wunsch echoed the sentiments of other witnesses when he said that "now is the time to act" on research and development of geothermal energy, and that he fully supports S.1543.

Geothermal consultant Dr. Kenneth H. Williamson testified of the practical ways the government could help geothermal energy grow. Because there is so much work to be done, motivation for initiation of projects is key. The government can offer incentives (such as subsidizing energy costs) to the industry. Such incentives have worked in Australia and Germany. Increased funding for research and education is needed to be able to harness geothermal energy in the U.S. And finally, the federal government can help by choosing and allowing use of lands with geothermal sources. The benefits of a clean domestic energy source will be worth the funding and resources given by the federal government.

Witnesses unanimously supported increased and stable funding for geothermal energy research and development. Senators were encouraged to act now, allowing the U.S. to expand its use of this clean, secure energy source as so many other countries are doing. Witnesses were divided on the attainability of the primary goal of S.1543, but believed that research in the field should move forward regardless of whether this main objective can be fully met.

A summary of the bill can be found here.
Additional information on geothermal energy can be found here.
A link to witness testimony can be found here.

-EAL

Senate Commerce, Science, and Transportation Subcommittee on Science, Technology, and Innovation hearing on
"Energy Efficiency Technology"

June 21, 2007

Witnesses:
Ms. Kateri Calahan, President, Alliance to Save Energy
Mr. Charles Zimmerman, P.E., Vice President, Prototype and New Format Development, Wal-Mart Stores, Inc.
Dr. Martha Krebs, Deputy Director for Research and Development, California Energy Commisssion
Mr. Douglas K. Johnson, Senior Director, Technology, Policy and International Affairs, Consumer Electronics Association
Mr. Jay Birnbaum, Senior Vice President and General Counsel, Current Group, LLC
Mr. Tom Hicks, Vice President of Leadership in Energy and Environmental Design, US Green Building Council

On June 21, 2007, the Senate Commerce, Science, and Transportation Subcommittee on Science, Technology, and Innovation nominally convened for a hearing on "Energy Efficiency Technology." However, Chairman John Kerry (D-MA) was only one of two senators present, and the sole member to stay for longer than five minutes of the 90-minute hearing. Senator Amy Klobuchar (D-MN) was present to make a quick opening statement, but left soon after to preside over the chamber.

In his opening statement, Kerry emphasized the lack of recognition for the role that energy efficiency can play in dealing with climate change. Kerry mentioned the attention received by potentially carbon neutral clean coal technology and renewable fuels such as cellulosic ethanol. Energy efficiency, he said, is "staring us in the face" and is no doubt the most immediate way to tackle the climate change crisis. In his remarks, Kerry referenced recent headquarters construction by the U.S.-based company Texas Instruments. The company, he said, designed its new building to be lower and smaller; it used straight pipes instead of ones that curved so as to conserve pumping energy. These efforts among others, Kerry said, led to a net of $3 million every year in energy cost savings for the company thereby making it profitable for the company to stay in the United States and keep American jobs.

The first witness to testify was Ms. Kateri Calahan, President of the Alliance to Save Energy. Calahan began with the startling statistic that households produce about 40% of the United States' carbon footprint, equal to that of Japan and India combined. She continued by applauding Senator Byron Dorgan's (D-SD) effort to encourage carbon neutral buildings in legislation. Calahan also urged the committee to monitor the Department of Energy (DOE), by maintaining its funding and by ensuring it adheres to its regulatory schedule. Calahan cited many efforts in energy efficiency that the nation has succeeded in, but added that there was substantial room for improvement. Referencing a particular study by energy efficiency advocates, she said that there are 15 household appliances that lack any federal efficiency standards. Implementing such standards would save consumers nearly $54 billion between now and 2030, in addition to the hundreds of billions of cubic feet of natural gas saved.

Mr. Charles Zimmerman, Vice President of Prototype and New Format Development for Wal-Mart Stores, Inc. next testified on the first-hand benefits of energy conscious construction. Zimmerman outlined all of the major energy saving techniques Wal-Mart uses in its thousands of stores, which as a whole are considered unofficially to be the largest energy purchaser in the world. Zimmerman detailed the designs of new stores that now include motion-activated lights in freezer aisles that only turn on when shoppers approach. In addition, skylights provide natural sunlight to accompany sensitive overhead lights that dim and brighten depending on cloud cover. Ongoing retrofitting efforts are underway for over 1,300 Wal-Mart stores, and although there is an initial cost, the energy savings makes the switch pay for itself in less than two years. In sum, Zimmerman provided a comprehensive set of concrete examples for energy efficiency, and on behalf of Wal-Mart came out in support for the government's efforts on such energy conservation.

Representing California's longstanding effort to be more energy efficient was Dr. Martha Krebs, Deputy Director for Research and Development at the California Energy Commission. Krebs described the various actions taken by the state government aimed at reducing energy and water consumption ever since California became the first state to enact efficiency standards for appliances in 1976. Since then, Krebs said, California per capita use of energy has remained constant since the 1970s, while average American usage has increased 50% over that time. Statistics presented also demonstrated 15% annual energy savings in the state consumption.

Mr. Douglas K. Johnson, Senior Director of Technology, Policy and International Affairs at the Consumer Electronics Association (CEA), testified next. Johnson's comments mainly focused on particular programs aimed at reducing appliances' energy consumption, specifically the Energy Star program. Johnson detailed the efforts by CEA, a trade association, in educating the public and promoting energy efficiency. He argued, however, that regulation on the state level is an unnecessary risk, citing the voluntary nature of programs like Energy Star as critical to the program's success.

The final two witnesses represented two organizations that focused on energy efficient infrastructure. Mr. Jay Birnbaum is Senior Vice President and General Counsel at the Current Group, LLC, which offers power companies an electric utility monitor called Smart Grid. Mr. Tom Hicks is Vice President of the Leadership in Energy and Environmental Design (LEED) division at the US Green Building Council. Birnbaum provided an alternate aspect to energy efficiency by describing what can be done on the supply-side of the energy equation. American businesses lose $100 billion due to power outages. By adding an automated monitoring service like Smart Grid, which detects outages and failures in a system, utility companies can assist consumers and reduce annual carbon emissions by up to 25 percent, according to Birnbaum. In his testimony, Hicks ran through the various successes of LEED and LEED buildings. LEED-certified green buildings, he said, "use an average of 36% less energy than conventional buildings," but come at a cost "less than 1.5% more than conventional construction." Hicks even mentioned the health and productivity benefits which have been found, in some studies, to correlate with green buildings.

Though visibly tired, Chairman Kerry pursued a lengthy question and answer period, addressing each panelist's testimony individually. His questioning varied from cost to consumer to suggested government role in the process. One issue for which Kerry evidently held an adamant opinion was the lack of public awareness of these programs and their benefits. Harking back to previous testimony, Kerry expressed his disappointment at the statistic that only 50% of the American public recognizes the Energy Star logo. When being questioned by Kerry for suggestions for promotion of energy efficiency, Zimmerman stumbled into what was likely the most memorable exchange of the day. Admitting his typical "habit," Zimmerman said he counted over 100 incandescent lights in the room where the hearing was taking place. He described the congressional offices as being the "most energy inefficient buildings" and criticized them more so for setting a bad example for visiting American youth who frequent the buildings. Kerry agreed and expressed hope that Congress would move forward to encourage more efficiency not only in their offices, but nation-wide.

-SDJ

House Committee on Science and Technology Subcommittee on Energy and Environment hearing on
"A Path Toward the Broader Use of Biofuels"

June 14, 2007

Witnesses:
Dr. Thomas Foust, Biofuels Research Director, National Renewable Energy Laboratory
Mr. John Berger, Chairman and CEO, Standard Renewable Energy and the CEO of BioSelect
Mr. Robert Dinneen, President, Renewable Fuels Association
Mr. Michael J. McAdams, Executive Director, Advanced Biofuels Coalition
Mr. David Waskow, Friends of the Earth, U.S.

The House Science and Technology Subcommittee on Energy and Environment met on June 14, 2007 to discuss the status of renewable biofuels, such as corn-based ethanol. The hearing was held to examine federal efforts on technologies related to all parts of the biofuel industry: fuel source (e.g. agriculture and other biomass), refining, distribution, and consumption.

Chairman Nick Lampson (D-TX) opened the hearing by encouraging increased attention to renewable energy resources. He acknowledged concerns that the expansion of corn-based ethanol could lead to higher food costs and problems with corn supplies. But, he was quick to point out that no other liquid transportation fuel is as cost-effective as ethanol right now. Lampson supports diversification of alternative renewable fuel sources by increasing funding for research and development.

In his opening remarks, Ranking Member Bob Inglis (R-SC) advocated regional decisions regarding the diversification of biofuels. Preferred biomass sources for fuels differed from region-to-region based on the availability of different crops. He emphasized his desire for a regional component to any biofuel legislation that will support the "beginning stages of what will be a very profitable industry." Inglis cited job growth, national security, and environmental protection as benefits from increasing the national consumption of biofuels in the transportation sector.

Chairman Lampson also yielded the floor to full committee Ranking Member Ralph Hall (R-TX), who issued a long introduction for the panelists, with particular attention for Michael McAdams, a former aide of his.

Dr. Thomas Faust, Biofuels Research Director at the National Renewable Energy Laboratory, was the first to testify. Faust ran through the various sources and methods for manufacturing biofuels, such as corn-based ethanol, cellulosic ethanol, and biodiesel. He suggested that future production from investment in biofuels could be significant. Recent studies suggest that ethanol production will reach about 12 billion gallons per year (bgy) within two years. In addition, Faust cited the so-called "Billion Ton Study" by the United States Department of Agriculture (USDA) and the Department of Energy (DOE) that suggests the possibility of utilizing 1.3 billion tons of biomass to yield the equivalent of as much as 3.5 billion barrels of oil. Faust also expounded on the inheritability and potential integration of current petroleum infrastructure to the manufacturing and distribution of biofuels. Lastly, Faust encouraged greater user-end integration of biofuels by encouraging production of flex-fuel vehicles and enhanced technology to improve the fuel efficiency of those vehicles.

Chairman and CEO of Standard Renewable Energy, John, Berger, presented testimony relating to the operation of a renewable resource energy company. Berger delineated the benefits and promise of biodiesel and emphasized the differences in chemistry and manufacturing from other biofuels, such as corn-based ethanol. Berger seemed optimistic about the future of biofuels, but advocated a structured future; he believes it is "imperative" for the biodiesel industry to set goals for progress. He also stressed the need for federally funded research to help the industry reach its goals and efficiency at a faster rate. One such endeavor worth pursuing, he said, is agricultural research. Berger cited the statistic that 60%-80% of the cost of biodiesel production is in feedstocks. Thus, by using modified crops that grow in typically arid regions and requiring less labor, biodiesel production costs could be reduced significantly.

Bob Dinneen, President and CEO of the Renewable Fuels Association, a nation-wide association representing the ethanol industry, focused on the research potential for new biofuel technology and production. He stressed the necessity and urgency of funding more biofuel research. He also advocated setting tough regulatory standards on refinery efficiency as well as biofuel blend levels. These regulations would ensure a viable and competitive product and transition to the technology.

Executive Director of the Advanced Biofuels Coalition, Michael McAdams, echoed the previous witnesses in expressing the technology's feasibility. He presented various visuals to demonstrate to the committee members the prospects for improvement on the already functional technologies. He addressed skeptics' concerns by showing current efforts in overcoming challenges posed by biofuels: namely volume, volatility, and stability in cold weather. Like Dinneen, McAdams also supported a low carbon fuel standard to regulate refinery emissions.

The last witness to testify was David Waskow, International Program Director for Friends of the Earth, U.S. Waskow ran through the benefits that renewables like biofuels could provide environmentally and economically and called for "a robust research and development program " now to advance the technology and As suggestions for such research, he mentioned better understanding of production, modification of marginal land into fuel production, and a full analysis of the potential impacts.

The question and answer period provided the subcommittee the opportunity to share some strong views on the issue of biofuel viability and to gather more information about the technology. Chairman Lampson focused many of his questions on the potential for production and distribution. Specifically, he asked about the ability for future biofuels to be delivered by pipeline instead of by rail or trucking. Dinneen responded that the infrastructure of biofuel manufacturing is not as centralized as the Gulf Coast refineries are for petroleum. Foust added that there are inherent properties to the biofuels that complicate their integration with the petroleum infrastructure. Lampson was also intrigued by a comment mentioned in passing about the feasibility of using algae as a biomass source. Foust explained the complexity of using algae was that the organism needed nutrients to grow, but paradoxically only produced oils (necessary for use as a biofuel) when starved. Developing a way to cultivate algae for its oils would take agricultural or genetic engineering feats. He cited a five to ten year effort to find a solution, but advocated other research priorities beforehand.

Ranking Member Inglis' questions were directed more on the management of research itself. He wanted to know how well laboratories coordinated and if too many research centers could hinder the effort. Dinneen and Foust agreed that about five research centers nationwide, one for each petroleum district, would be a warranted. Currently there are three centers, so two more would be sufficient. The petroleum districts each have different fuel quality standards, so coordinating biofuel development with these distrcts would allow for a smoother transition from petroleum-based fuels.

Several other representatives engaged in the questioning. Rep. Hall only asked a few questions pertaining to the time frame of development of higher quality fuels. McAdams respond that higher quality fuels are already in production abroad.

Rep. Lynn Woolsey (D-CA) and Rep. Roscoe Bartlett (R-MD) were the most vocal about their views pertaining to biofuels. Woolsey expressed her concern about the United States' current dependence on petroleum. She viewed changing to renewables as a necessity but held reservations about the rising cost of corn for food products. Panelists agreed that with proper diversification and technological support, food price increases could be avoided. Bartlett displayed open skepticism about the viability of biofuels.

In Dinneen's last comment before the panel, he said that auto manufacturers predict that by 2021 50% of vehicles will be flex-fuel. That, in and of itself, indicates that the potential for widespread biofuels will be on the minds of industry, government, and consumers for years to come.

For witness testimon and relevant legislative links, click here.

-SDJ

House Natural Resources Committee Mark up of H.R. 2337 "Energy Policy Reform and Revitalization Act 2007"
June 6, 2007

On June 6, 7, and 13, 2007, the House Natural Resources Committee held a full committee mark up of H.R. 2337, the "Energy Policy Reform and Revitalization Act of 2007" introduced by Chairman Nick Rahall (D-WV). According to the summary of the bill, it would "promote energy policy reforms and public accountability, alternative energy and efficiency, and carbon capture and climate change mitigation…" The bill would repeal parts of the Energy Policy Act of 2005. Specifically it would repeal the prohibition of fee increases for energy resources developed on federal lands, repeal a deadline for considering applications, repeal the requirement to designate rights-of-way on federal land, change the requirements for oil shale and tar sands leases and repeal the right to a rebuttable presumption regarding application of categorical exclusion under the National Environmental Policy Act (NEPA). The bill would also disallow royalty-in-kind payments except for the filling of the Strategic Petroleum Reserve and it would require the Minerals Management Service to conduct a minimum of 550 audits of oil and gas leases per year.

Besides changing the Energy Policy Act of 2005, the legislation would add some additional requirements for the Department of the Interior, particularly the U.S. Geological Survey and also for the National Oceanic and Atmospheric Administration (NOAA). HR 2337 authorizes the USGS to assess potential sites for carbon capture sequestration, sets up a National Global Warming and Wildlife Science Center within the USGS and sets forth initiatives for dealing with climate change, including an intra-agency adaptability panel. The bill calls for continued research of the effects of climate change on the oceans by establishing a national oceans observation system.

The bill also adds a regulatory process for future siting of commercial scale deployment of wind power to protect wildlife, provides provisions for renewable energy technology and sets forth many additional requirements for environmental protection related to energy extraction on public lands.

Chairman Rahall reminded the committee that this bill is not set in stone and will be sent to several other committees for amendments. Ranking Member At Large Don Young (R-AK) called this bill the "suicide bill". Young, along with other Republican representatives, felt that this bill undoes the work of the Energy Policy Act of 2005. Young stated that he hopes the President vetoes this bill.

Despite strong partisan opposition to the bill, the legislation was ultimately approved to be reported to the House as amended by a vote of 26-22.

The full text of the legislation is available from Thomas

-DM

Senate Finance Committee subcommittee on Energy, Natural Resources and Infrastructure hearing on "Energy Efficiency: Can Tax Incentives Reduce Consumption?"
May 24, 2007

Witnesses:
Kateri Callahan, President, Alliance to Save Energy
Stuart Thorn, President, Southwire Company
Sean Casten, President, Recycled Energy Development
Dan DeLurey, Executive Director, Demand Response and Advance Metering Coalition
Chris Edwards, Director of Tax Policy Studies, Cato Institute
Doug Smith, PhD, President, NanoPore

The subcommittee of Energy, Natural Resources and Infrastructure of the Senate Finance Committee met on May 24, 2007 to discuss the role that tax incentives might play in bolstering energy efficiency. The subcommittee also discussed new energy efficient technologies for which there are no tax incentives. Chairman Jeff Bingaman (D-NM) noted several existing tax incentives aimed at increasing energy efficiency, but felt that those incentives were "only a fraction of what could be accomplished in terms of energy efficiency." Bingaman cited a report from the McKinsey Global Institute which stated that global implementation of current technologies could reduce world energy consumption by 50% over the next ten years.

Callahan supported Bingaman's claim of improved energy efficiency within the U.S. The Alliance to Save Energy Coalition estimates that without the efficiency gains already made, the U.S. would be using 43% more energy. Much of these savings are due to federal energy policies and other programs like motor vehicle standards and the Energy Star program. Callahan's testimony encouraged tax incentives that support research and development, create markets for the most advanced technology, support public education programs that encourage people to buy efficient appliances, and create an efficiency code.

Casten told the subcommittee about the benefits of combined heat and power (CHP) systems and recycled energy. He also laid out tax incentive options that reward CHP technology and energy efficiency. CHP technology takes normally wasted exhaust heat and uses it to produce electricity. Unlike normal power plants which only have an efficiency rate of 33%, CHP technology has a 60-90% efficiency rate. This technology goes beyond saving fuel, it can also lower CO2 emission rates and decrease the likelihood of power outages. Despite these benefits, CHP technology is hindered by outdated regulatory polices, for example "in 15 states, it is illegal for any company other than the electric utility to sell a kilowatt hour, effectively preventing the deployment of an energy outsourcing industry" said Casten. Deployment of this technology was also set back when the CHP investment tax credit was cut from the Energy Policy Act of 2005 EPACT (Energy Policy Act) because of an imprecise cost calculation by the Treasury. Casten hoped that the Senate would endorse the H.R. 2001 provision which provides tax incentives for CHP technology.

Thorn on behalf of The National Electrical Manufacturers Association (NEMA), described a wide array of energy efficient technologies and tax incentives and additional incentives options that need to be added. Some examples include, extending the Commercial Building Tax Deduction. This incentive has led to greater efficiencies in lighting and other retrofits of existing buildings. Currently this provision expires at the end of 2008 but NEMA feels it should be extended to 2014. NEMA would also like a tax incentive placed on energy efficient electric motors. Estimates of savings from these new motors are around 8 billion megawatt hours by 2030 which would translate into $500 million in savings to consumers. Currently there is a provision for expanding the use of efficient motors under the Energy Savings Act of 2007. This tax provision would be limited to three years after the legislation was enacted. If these incentives are adopted it will greatly enhance the productivity and efficiency of the U.S. in years to come.

DeLurey's testimony was based on the findings of the Demand Response and Advanced Metering Coalition (DRAM), which focuses heavily on developing an efficient electrical grid system and the use of smart pricing. He pointed out some of the absurdities of current energy pricing by stating "a majority of customers do not pay more [for power] in the summer than in the middle of the night in the spring and fall". DeLurey is also a proponent of smart meters. Smart meters allow customers to see when and how their electricity is being used. Consumers can then alter their energy use to reduce their electricity bills and conserve energy.. The smart grid system as stated by DeLurey "is that of an intelligent dynamic 'organism' that allows electricity to be planned and operated in a way that optimizes all of its components to lower costs, increase reliability and utilize new informational and communication technologies." Using the last blackout in the northeast as an example, using smart grid technology power was restored in some areas a full day earlier than expected. However, there is no tax policy currently in place that would help expand deployment of this technology. Congress supported the expansion of smart grid technology as stated in the EPACT 2005 section 1252 (f). DeLurey said that if Congress wishes to accomplish this policy goal it should give serious consideration to tax incentives that reduce depreciative rates and start a national smart grid fund.

Dr. Smith's testimony shed light on thermal insulation manufactured by NanoPore Incorporated. Thermal Insulation can be used to retrofit existing technology while costing less and producing similar energy savings in a much shorter time frame. Using refrigerated cooling trailers on reefer trailers as an example, Smith stated that the cooling units on 200,000 of these trailers alone burns 2,000 gallons of diesel fuel a year. If just a ¼ inch of thermal insulation was applied to these trailers the amount of fuel required to run the cooling units would be cut in half. Despite these savings, there is no benefit to the operator to install that saves on emissions and no help on the financial burden of purchasing the insulation. NanoPore believes that the best way to encourage the use of this technology is to provide a tax incentive for retrofitting existing technology.

Despite the positive push for tax incentives on energy saving technology Edwards was strongly opposed to the idea. Raising the tax complexity creates many loop holes that cause problems. Instead of having Congress try to micromanage the economy there are other tax provisions that can be eliminated that encourage energy efficiency. In his testimony he stated that the number of energy tax expenditures has jumped from 11 to 23. This increase of tax provisions hinders economic efficiency by distorting market prices which in turn causes labor and money to be put to less productive uses. Edwards concluded that these tax incentives give special treatment to certain people instead of making consumers and businesses as equal as possible.

There is a plethora of available energy saving technologies that are within reach of being deployed today. Despite Edwards's disapproval, the subcommittee and the other witnesses seemed optimistic about tax incentives as a positive step towards increasing energy efficiency.

The witness testimony can be viewed here.

-DM

Senate Energy and Natural Resource Committee hearing on "Challenges Associated with Coal Gasification, Including Coal to Liquids and Industrial Gasification"
May 24, 2007

Witnesses:
Dr. Antonia Herzog, Climate Center Staff Scientist, Natural Resources Defense Council
Mr. Bill Fulkerson, Senior Fellow, Institute for Secure and Sustainable Environment, University of Tennessee
Mr. James Bartis, Senior Policy Researcher, RAND Corporation
Mr. David Denton, Business Development Director, Eastman Gasification Service Company
Dr. Jay Ratafia-Brown, Senior Engineer/ Supervisor, SAIC-Energy Solutions Group

The Senate Energy and Natural Resources met on May 23, 2007 to discuss the potential of coal gasification as a future energy source and its impact on the environment. Chairman Jeff Bingaman (D-NM) laid out the situation in no uncertain terms "We are entering a challenging time for energy in the U.S. While our fuel prices are going up and we are becoming increasingly reliant on unstable or unsavory regimes for that fuel…I don't think anyone here would seriously dispute that coal is an important part of our fuel mix for the foreseeable future." However, while this fuel source may be an attractive alternative, particularly for the transportation sector, Bingaman cautioned that the nation must consider coal gasification's impact on greenhouse gas emissions before investing billions of dollars in development. Ranking Member Pete Domenici (R-NM) added "Coal is a resource we have in abundance, and if we develop it wisely and lead the march to new clean technology, it will give us the economic potential to compete with the world's emerging economies."

According to Dr. Herzog the U.S. has two major obstacles to overcome to address its energy needs: reduce its dependence on foreign oil for security purposes while at the same time use technologies that reduce CO2 emissions to combat global warming. While she noted the benefits of coal gasification Herzog does not support the use of coal gasification without carbon capture sequestration (CCS). More research is needed to find more effective ways to make coal gasification cleaner. She also pointed out the other harmful environment effects associated with coal, such as mountain top removal, mine accidents, acid-mine drainage, and toxic sulfur dioxide and nitrous oxide emissions.

Fulkerson's testimony resonated Herzog's in terms of carbon capture technology "Of course, liquid fuels from coal can be produced using oxygen blown gasification and Fisher-Tropsch, but this will result in about twice the amount of CO2 vented compared to petroleum…if excess CO2 is sequestered instead of vented the coal synfuels process can be equivalent to petroleum in net CO2 emissions." This process is economically feasible as long as gas prices remain above $50 a barrel. However, Fulkerson felt that there is more promise in developing biofuels. He claimed that by 2050 all fuels could come from biomass but this could only be accomplished with a large fleet of light weight vehicles that have an average fuel efficiency of 60 miles per gallon.

Bartis described how the Fisher-Tropsch method of coal gasification works. Coal is gasified to form three gases, hydrogen, carbon dioxide and carbon monoxide. Carbon dioxide is removed from the mixture along with trace elements of other contaminants. The hydrogen and carbon monoxide is then sent to a reactor and catalytically converted into a liquid form, which is refined and then ready to be used as jet fuel, diesel fuel or regular motor fuel.

Bartis explained the national security need for increased production of coal-liquid technology. He stated that OPEC earns over $500 billion a year from exported oil. This raises security concerns because OPEC members are a part of regimes that do not support the U.S. If new fuel sources were developed today it would displace millions of barrels of oil being imported from OPEC thus lowering their revenues and increasing national security. A 2005 analysis done by RAND showed that an increase of 3 million barrels of liquid fuel produced could result in a world oil price drop of 3-5% and further research suggests that an increase of 6 million barrels a day would cause the price of oil to drop between 6-10%. Less revenue for OPEC could mean less money spent on munitions by unsavory regimes. On the domestic side, RAND found that the average American consumer could save hundreds to thousands of dollars on fuel expenses.

Bartis stated that increased greenhouse gas emissions would result from using coal-liquid technology. In his testimony he urged the development of a limited number of plants particularly in the western U.S. where water sources are more limited and carbon emissions are more pronounced. Bartis also noted concerns about limited capital investments to support greater development of such plants and the next witness, David Denton, a business manager for a gasification company provided more details about the economics of coal gasification. Denton's company, Eastman Gasification Services Company, even with 20 years of experience is unable to persuade financiers to bring down the risk premium cost. The cost is 20% higher than the cost of plants built after the initial first dozen are constructed. Large scale demonstrations of CCS are also needed to find effective ways to eliminate the additional carbon dioxide emissions produced by coal gasification processes.

Dr. Brown offered a solution to future transportation fuel needs that would use a combination of biomass and coal-liquid technology to produce synfuels. This combination would take advantage of a renewable energy source while cutting carbon emissions to almost zero. A plant in the Netherlands is producing synfuels through this combination right now. Brown cautioned about problems with such synfuels. The most significant problem being that the energy density of biomass is on average only about 10% of that of coal.

Domenici's asked Bartis what Congress should do to help develop coal-liquid technology commercially. Bartis replied that first investors should be educated about the actual costs, which are less than people think and then the federal government should provide a 50/50 cost share plus tax credits and protection if oil prices fall below $50 a barrel. He stressed that improving and advancing CCS technology was key to making coal-liquid technology economically and environmentally feasible. Denton addressed Senator Jon Tester's (D-MT) question about the key concerns with CCS. The current concerns with CCS are who has the rights and thus the liability for carbon storage reservoirs and what the possible impacts are from long term carbon storage.

Committee members were also curious about the local environmental impacts these plants would have. Senator Bob Corker (R-TN) noted that coal-liquid plants are heavily reliant on water and was curious as to how much water such plants would need compared to biofuel facilities. Bartis was unable to answer that question but he did comment that installing cooling towers would reduce the need for water but add to the cost of running the plant.

Senator Lisa Murkowski (R-AK) asked Denton if some of the operating plants could be retrofitted with carbon capture technology. Denton said that yes it is possible and noted that carbon that is not sequestered may also be used for enhanced oil recovery. Bartis suggested offering tax credits to get companies to retrofit their plants. He added that a tax needs to be put on carbon, in order to get consumers to switch from petroleum to synfuels.

Herzog was the only witness who was not optimistic about coal gasification. While using Integrated Gasification Combined Cycle plants (IGCC) could be used to produce liquid fuel without excess CO2 emissions it still does not address the need to cut total emissions that will eventually cause damaging climate effects. She favored cleaner, more diverse and renewable sources for fuel. She said "Further complementary and targeted energy efficiency and renewable energy policies are critical to achieving CO2 limits at the lowest possible cost but they are no substitute for explicit caps on emissions." While coal-gasification may be a solution to energy independence it does not address the larger looming problem of global climate change.

Link to witness testimony can be viewed here.

-DM

Joint Economic Committee hearing on "Is the Market Concentration in the U.S. Petroleum Industry Harming Consumers?"
May 23, 2007

Witnesses:
1st Panel:
Mr. Thomas McCool, Director of Center for Economics in Applied Research and Methods Group for the Government Accountability Office (GAO)
Dr. Michael Salinger, Director of Bureau of Economics for the Federal Trade Commission
2nd Panel:
Dr. Diana Moss, Vice President of the American Antitrust Institute
Mr. Denis DeCota, Executive Director of the California Service Station and Automotive Repair Association
Ms. Samantha Slater, Director of Congressional and Regulatory Affairs at the Renewable Fuels Association
Dr. James Smith, Chair of Oil and Gas Management at Southern Methodist University

On May 23, 2007 the Joint Economic Committee met to explore the topic of how recent oil company mergers have affected the consumer. Senator Charles Schumer (D-NY) opened the hearing with "we have an elite group of five very large, integrated oil companies dominating our domestic petroleum market, and there has been very little analysis on the impact of those mergers…should we begin serious exploration of whether or not to undo some of those mergers?" This question stems from the fact that the national average for the price of gas reached $3.22 last week. The Department of Energy (DOE) predicted that the price of oil would hover around $66 a barrel, $4 less than last summer; however, gas prices are up 34 cents. Schumer expressed concern that the profits being made are not going towards renewable energy resources or reducing the price of gas. Schumer listed several reasons for this. Within the past 30 years there has not been one new refinery built and last year the oil industry spent $52.4 billion on stock buybacks while spending just $1.2 billion on renewable energy resources. "By 2005, the largest five [oil companies] controlled 55% of the market and the largest 10 refiners dominate the market with over 80% market shares." Schumer said. He closed his statement saying "When markets have been distorted from lack of competition in the past, the federal government has taken action."

Ranking Member Jim Saxon (R-NJ) took a different look at the problem and felt the issues surrounding high gas prices had more to do with the Organization of Petroleum Exporting Countries (OPEC) than American oil companies. He stated that OPEC controls about 70-80% (about 730 billion barrels of oil) of the world oil reserves and they are artificially making oil scarce to increase profits. Since production within the Persian Gulf is less than $5 a barrel it would seem logical that gas prices should be lower, instead OPEC is exploiting the augmented Asian demand and increasing the price of oil. Representative Carolyn Maloney (D-NY), however, felt that the high cost of gasoline was associated with Bush Administration policies. She noted that since Bush took office the price of oil has gone up over $30 a barrel and tax breaks have been given to "big oil". Maloney believes that restricted capacity and lack of competition is hurting consumers.

The first panel of witnesses, Dr. Salinger and Mr. McCool, did not believe there was a lack of competition among big oil corporations. In Mr. McCool's testimony he stated there were other factors that affected the price of gas other than just the price of crude oil. He cited four other factors that the Government Accountability Office (GAO) found to affect gas prices. As cited in the Energy Markets Report: Mergers and other Factors that Influence Gasoline Prices, they are "increasing demand for gasoline, refinery capacity not keeping up with demand, a declining trend in gasoline inventories and regulatory factors, like the national air quality standards, that have induced some states to switch to special gasoline blends. In 2006 the U.S. consumed an average of 387 million gallons of gasoline per day. This consumption is 59% more than the 1970 average per day consumption of 243 million gallons." However, he did comment that the 1990's oil mergers did cause a slight rise in wholesale gasoline prices on average between 1-7 cents per gallon but he could not comment on mergers made after 2000 because the effects on gasoline are still being studied.

Dr. Salinger agreed with McCool's assessment, that consolidation has not been a major factor in gas prices. He added that domestic reliance on crude oil has increased while the level of importation of cheaper foreign oil being imported has decreased thus causing a rise in gas prices. He stated that the Federal Trade Commission (FTC) has found the level of industry concentration to be moderate and that for the past two decades merger policy has been consistent. "Since 1981 the FTC has challenged 21 petroleum mergers and received significant divestiture or other reliefs in 17 of those cases, the other four mergers were abandoned after the commission challenged them."

Despite their testimony, Schumer challenged the panel in his first round of questioning as to why gas prices are up compared to last year when the price of crude oil was higher compared to the price of crude oil now. Both witnesses answered it is due to tighter refining capacity and refining breakdowns. Salinger added that the price of gas on one day or during one week is not a good indicator of economic trends and cannot be used to determine what factors may cause longer term (one year or longer) changes in gas pricing. Maloney asked the same question however, this time Salinger answered the question in a different way. "Gas prices are high compared to what they used to be. You don't realize how fortunate we were to have them that low for so long." Salinger also pointed to evidence that oil prices would be higher than they are now without the mergers. The mergers have made companies more efficient, allowing them to keep prices from rising more rapidly. Salinger also pointed out that there was no evidence that companies are operating at lower refining capacities because of the mergers.

Representative Maurice Hinchey (D-NY) countered that it would make sense for oil companies to want their refineries to operate at reduced capacity because this would drive up gasoline prices and increase their profits. Salinger disagreed because gasoline is the highest money maker for oil companies and it would not make sense to inhibit their own ability to sell gasoline. He assured the committee that the FTC is more aggressive with this industry than others and that oil companies are not conspiring together to fix prices.

"From 2000-2005 the oil industry reported $383 billion in profit while only investing $1.2 billion in renewable energy sources. Again how can we argue that this is better for consumers and do you find those numbers confounding?" asked Schumer. Salinger replied that the profits were not surprising given the scale of the petroleum industry. McCool added that companies will only invest a certain amount of money in renewable energy sources based on the potential profit of renewables and their overall economic plan for future growth. However Schumer felt it was wrong that during an energy crunch oil industries use their money to buy back their own stock rather than invest it into increasing refining capacity or into renewable energy. Senator Robert Casey Jr. (D-PA) ended the round of questioning with a message urging the FTC to take further initiative to further investigate oil mergers He said "This reality is stark and profound…it doesn't help anyone to say that there is nothing we can do."

However, in the second panel, Slater shed light upon strategies of the oil companies, other than mergers, that were affecting gas prices. Slater claimed that oil companies are purposely blocking E-85 (gasoline that is 85% corn-based ethanol) from their pumps by invoking penalties which are in violation of the 1980 Gasohol Competition Act. According to Slater under this act it is "unlawful to impose any condition or restriction…that unreasonably discriminates against or unreasonably limits the sale, resale, or transfer of gasohol or synthetic motor fuel of equivalent usability." This act was adopted by Congress in order to prevent oil companies from creating barriers that would prohibit the sale of gasohol and other synthetic fuels. DeCota verified these remarks in response to a question citing his own service station as being a victim of this. "I have a supply agreement. I can't buy E-85 or I get penalized." Slater suggested to the committee that a regulatory agency be formed in order to enforce the gasohol act.

DeCota went back to the issue of mergers causing rising gas prices. In his testimony he stated that "Dealers must compete with proprietary company operated stations at margins that simply won't sustain their economic viability…dealers are forced out of their stations they are replaced by company operations…who simply raise the price to that community once the competition is gone." Cavaney assured the committee that oil company mergers are not the cause of high gasoline prices and instead the government needs to focus on the factors that are shaping those prices which would include demand out pacing supply.

Full text of the GAO Report can be viewed here

-DM

House Natural Resources Committee legislative hearing on H.R. 2337, the "Energy Policy Reform and Revitalization Act of 2007"
May 23, 2007

Witnesses:
Panel 1:
Walter Cruickshank, Deputy Director, Minerals Management Service, Department of the Interior
Henri Bisson, Deputy Director, Bureau of Land Management, Department of the Interior
Melissa M. Simpson, Deputy Undersecretary, Natural Resources and Environment, U.S. Forest Service, Department of Agriculture
Vickie VanZandt, Senior Vice President, Transmission Business Line, Bonneville Power Administration, Department of Energy
Timothy R. E. Keeney, Deputy Assistant Secretary for Oceans and Atmosphere, National Oceanic & Atmospheric Administration, Department of Commerce

Panel 2:
The Honorable John Engler, Former Governor of Michigan, President and CEO, National Association of Manufacturers
Jim Martin, President, 60 Plus Association

Only two years after the passing of the Energy Policy Act of 2005, Congress is again seeking to create and amend guidelines for energy development and usage. On May 23, 2007, the House Natural Resources Committee held a legislative hearing on H.R. 2337, the Energy Policy Reform and Revitalization Act of 2007. Bill sponsor and Committee Chair Nick Rahall II (D-WV) stated that the bill will "advance alternative energy strategies" while exploring ways of dealing with climate change, such as carbon sequestration. He mentioned that the bill will help to curb handouts to oil and gas companies that "in many instances are not paying what is owed to the American people." While he stated that he was not against oil production on public lands, he lamented that "in the rush to drill, American values are being placed on the chopping block," noting the loss of pristine lands and the negative impacts on farmers, ranchers, and hunters. Rahall stated his belief that H.R. 2337 does not overturn the 2005 Energy Reform and Revitalization Act, but rather fixes holes in it while holding major oil and gas companies accountable.

Representative Steve Pearce (R-NM) expressed his extreme discontent with the bill, saying, "the only thing I see being revitalized by this bill is the economy of Iran and Venezuela." He believes the bill would hurt American manufacturing jobs, and reflect the wishes of "extremists and environmentalists that care more about birds and bats than the price Americans pay for energy." Pearce also commented that less than three percent of the outer continental shelf is currently being leased for oil and natural gas production, but H.R. 2337 would limit further exploration and cause constituents to "sweat it out in the dark" because the costs of electricity will continue to rise. "We have a bill before us that guts biomass development," he continued, adding that it also "limits wind development" and would put the country "at the mercy of OPEC."

The Republican committee members who attended the hearing opposed H.R. 2337. Ranking Member Don Young (R-AK) said the bill would "make energy more expensive and less available," adding that "the only thing this bill will do is create more hot air, which might drive the wind mills." He complained that "the environmentalist community does not want to supply energy to this nation," and energy production in the Arctic National Wildlife Refuge is not developed because "we have to worry about the Cuckoo bird." He criticized the 110th Congress, saying they have done "nothing but spend money overseas." Several times throughout the hearing he referred to the legislation as a "bastard bill," and he concluded simply with "this is a bad bill."

Rahall apparently was not happy with Young's comments on the bill, stating "I cannot wait to hear some sane opposition to this bill." He questioned the accountability of appointees of the current administration, noting the use of "retirement as some sort of perverse witness protection program." He cited the upcoming retirement of Johnnie Burton of the Minerals Management Service, as well as another official at the MMS who retired shortly after being asked to testify at a hearing. He also mentioned the scandal surrounding Julie MacDonald, who resigned from the Department of the Interior after allegedly coercing scientists to manipulate data. They are "building a wall of shame at the DOI," he stated.

Bobby Jindal (R-LA) stated that high natural gas prices are hurting the chemical industry, and limits on oil and gas production would hurt the over 80,000 people employed in the industry in Louisiana. Henry Brown Jr. (R-SC) also said that the bill would limit development of America's natural resources while increasing the cost of oil and gas. William Sali (R-ID) described how many of his constituents in Idaho must drive great distances in rural parts of the state, and high gas prices have hurt them. He expressed his belief that H.R. 2337 would not help to lower gas prices, and would also hurt the development of wind power.

Many of the Democrats supported the bill. Representative Donna Christensen (D-VI) expressed her approval of the bill, noting that it provides for ocean technology development that could be very useful in insular areas of the U.S. This bill "will begin the process of ending our dependence on foreign oil," she stated. Peter DeFazio (D-OR) also noted his support for the bill, emphasizing that it provides "adequate protections for wildlife" while helping to prevent large companies such as Exxon-Mobil from gouging consumers while handing out multi-million dollar bonuses to their executives. Edward Markey (D-MA) also criticized big oil, saying "the Christians had a better chance against the lions than consumers have against the oil companies." Jay Inslee (D-WA) mentioned that he is a member of the Audubon Society, and approves of the bill's attempt to find a balance between development of wind energy and protection of bird life. Jim Costa (D-CA) noted that Japan and Germany are the current leaders in solar energy, which is "unfortunate, because at one time [the U.S.] was the world's leader." He expressed the need to be good stewards of the land while still using the planet's energy resources.

Despite general party support for the bill within the committee, a few Democratic representatives were hesitant. "I am greatly concerned that many of the provisions in this bill would take the U.S. in the wrong direction," stated Dan Boren (D-OK). He noted that alternative energy sources are still in research phases, and we cannot fully depend on them yet.

All of the witnesses voiced opposition to specific sections of the bill. Walter Cruickshank, Deputy Director of the MMS, noted "serious concerns" about portions of the bill that would set restraints on the MMS's Royalty in Kind and Royalty in Value programs. Henri Bisson, Deputy Director of the BLM, also noted technical issues with the bill, especially as relating to granting permits for geothermal and wind energy production on federal lands. Melissa M. Simpson, Deputy Undersecretary of Natural Resources and Environment for the U.S. Forest Service indicated that parts of the bill would repeal portions of the Energy Policy Act of 2005, creating negative effects. She noted that significant amounts of time and money have been spent to comply with the 2005 act, and the new bill would negate this spending. She also noted that a narrow definition of biomass in the bill could hurt the Forest Service's ability to use biomass for energy production. Vickie Van Zandt, representing the DOE, noted that the DOE does not "believe this legislation is necessary." The final witness of the first panel, Timothy R. E. Keeney of NOAA was the least negative about the legislation, praising the bill's call for an integrated ocean observing system. However, he still cited technical problems with specific language in the bill.

When Pearce asked about "provisions in the bill that limit dependence on foreign oil," he was met with silence from the panel. Maurice Hinchey (D-NY) asked the witnesses about what was being done to develop solar energy and he received vague answers that suggested nothing was being done.

The second panel included John Engler, President and CEO of the National Association of Manufacturers, and Jim Martin, President of the 60 Plus Association. Engler stated that you "cannot separate energy, great jobs, and the economy," and stated his disapproval of the new bill. At one point he held up a piece of oil shale from the Barnett Shale formation in Texas. He cited the removal of oil from the shale as an achievement of improved technologies, noting that while the rock contains only "four percent gas," more than 1.6 billion cubic feet of gas are extracted from the formation each day. He stated that H.R. 2337 would hurt the ability to develop similar resources, including the oil shale reserve that is "ten times greater" than the entire amount of oil the world has used over the past 200 years. Martin voiced concern for the need for cheap energy, stating that "when energy supplies are tight, seniors are hurt the most" because they have fixed incomes.

While partisanism ran high during the hearing, there was some reaching across the table for compromise. Boren, who was one of the few Democrats present to voice concerns about the bill, also called for continued bipartisan discussion and a push for finding the "common interest" of all committee members. Grace Napolitano (D-CA) assured the Republicans that their concerns would be taken into account, saying "if we can make changes in the legislation to address some of your legitimate concerns, we will."


Full text of H.R. 2337 is available here.

Full text of the witness testimony is available here.

-PS

House Science and Technology Committee Energy and Environment Subcommittee hearing on "Developing Untapped potential: Geothermal and Ocean Power Technology"
May 17, 2007

Witnesses:
Dr. Jefferson Tester, Meissonier Professor of Chemical Engineering, Massachusetts Institute of Technology
Mr. Paul Thomsen, Public Policy Manager, Ormat Technologies, Inc.
Dr. Annette von Jouanne, Professor of Power Electronics and Energy Systems, Oregon State University
Mr. Sean O'Neill, President, Ocean Renewable Energy Coalition
Mr. Nathanael Greene, Senior Energy Policy Specialist Natural Resources Defense Council.

"The solution to our energy problems will come from a variety of sources, and they need to be clean, renewable and affordable." stated Ranking Member Bob Inglis (R-SC). On May 17, 2007 the House of Science and Technology subcommittee of Energy and Environment met to hear about two new renewable energy bills, H.R. 2304 introduced by Congressman Gerald McNerney (D-CA) and H.R. 2313 introduced by Congresswoman Darlene Hooley (D-OR). "H.R. 2304…directs the Secretary of Energy to support research, development, demonstration and commercial application of advanced technologies to locate and characterize geothermal resources and produce geothermal energy." as stated by the hearing charter. H.R. 2313 directs the Secretary of Energy to do the same thing except to "produce electric power from renewable marine resources, including: waves, tidal flows, ocean currents, and thermal gradients." In McNerney's opening statements he said "If geothermal is going to be used here we need to be consistent."

Dr. Tester laid out carefully what geothermal power is: "Geothermal resources are usually described in terms of stored thermal energy content of the rock and contained fluids underlying land masses that are accessible by drilling." In Dr. Tester's testimony he favored investing now in geothermal power because there are no CO2 emissions, no cooling water needs and a limited environmental footprint. "Geothermal power would have a positive influence on security, the economy and the environment." Using Iceland as an example he said "Iceland's extensive geothermal network developed by Reykjavik Energy and other companies now provides 100% of Iceland's heating needs and 25% of their electric power."

Congressman Nicholas Lampson (D-TX) asked Tester if he thought geothermal was a mature technology. Tester replied "Geothermal is a resource that has a variety of grades and it can be improved, however, it cannot be regarded as a mature technology." Thomsen added that geothermal power is captured by a suite of technologies that are not fully mature.

In a follow up question Lampson asked Tester to describe the resources and potential. Tester answered that geothermal potential exists largely on the Gulf Coast and areas west of the Mississippi. He also added that areas in the west are ready to be developed now. Thomsen added that "The U.S. is the world's largest producer of geothermal electricity. The 2,800 MW existing power capacity generates an average of 16 billion kilowatt hours of energy per year." The U.S. Geological Survey has identified an additional 100,000 MW of baseload power that is ready to be developed. He went on further to state that an investment of $6 billion will create 10,000 permanent new jobs and stimulate over 40,000 in construction and manufacturing.

In regard to wave energy application, Dr. von Jouanne said that it is still in its preliminary stages and that Oregon State University is leading the way in wave energy research. Right now there are 12 preliminary applications for wave energy sites along the Pacific Coast. The potential for this energy source seems to be vast according to von Jouanne. "If we could just tap into just 0.2% of the ocean's power we could power the entire world."

Wave energy is a broad term that encompasses many different applications of wave energy being converted to electricity. As outlined in Sean O'Neil's testimony they include wave energy converters, tidal/current, ocean thermal energy conversion (OTEC), offshore wind, and marine biomass. The kind more often referred to in the hearing was tidal current systems. As stated in O'Neil's testimony "these systems capture wave energy of ocean currents below the wave surface and convert them into electricity. Typically these systems rely on underwater turbines, either horizontal or vertical, which rotate in either the ocean current or changing tide (either one way or bi-directionally)." In the first round of questions Lampson asked Jouanne how the Army Corp of Engineers is involved. She answered that they are key in the regulatory process and in regard to participation they do the most sand transport needed for building the facilities. Ultimately O'Neil concluded in his testimony that offshore energy can reduce our need on foreign oil and create new jobs in coastal communities.

However, development of this resource is lagging far behind. Congresswoman Hooley asked Jouanne in relation other renewable energy sources how does wave energy compare Dr. von Jouanne answered that the technology is about 20 years behind and a great deal of research and development needs to take place for this to be cost competitive. Wave energy can be cost competitive in the future, because water is 832 times denser than air, so more energy can be extracted from a smaller area. Hooley asked when wave energy would be available for commercial use in this country. O'Neil responded that wave energy technology could be economically viable in Alaska now because Alaskans pay 80 cents a kilowatt hour, while ocean wind power costs less than 40 cents per kilowatt hour. However, in other areas he stated that it could take 5-8 years for commercial development to become profitable.

Finally in Greene's testimony he offered the committee recommendations for how federal funding should be outlined in the two bills. For the wave energy technology bill, Greene suggested the legislators "Focus federal R&D dollars on studies of a few regions with high resource potential…ensure that studies address the cumulative impact of multiple projects and of multiple installations within one project." Greene had a similar recommendation for geothermal power as well. Finally, Greene called for a consensus among regulators, the public and industry on ways to avoid and limit the cost and scale of geothermal technology so that it can be deployed quickly.

-DM

House Science and Technology Committee Energy and Environment Subcommittee
hearing on "Prospects for Advanced Coal Technologies: Efficient Energy Production, Carbon Capture and Sequestration."

May 15, 2007

Witnesses:
Dr. Robert Finley, director of the Energy and Earth Resources Center at Illinois State Geological Survey;
Mr. Carl O. Bauer, Director, National Energy Technology Laboratory, Department of Energy;
Mr. Michael Rencheck, Senior vice president, engineering, projects and field services, American Electric Power;
Mr. Stuart Dalton, Director, Generation, Electric Power Research Institute;
Mr. Gardiner Hill, Director, CCS Technology, Alternative Energy, BP.

The House Science and Technology Subcommittee on Energy and Environment met on May 15, 2007 for a hearing on advanced coal technologies. The purpose of the hearing was to educate the committee on carbon capture technology and the future of coal fired plants. "Approximately 50% of the electricity generated in the U.S. is from coal…and the electric power generates over 40% of the nations CO2 emissions." said Chairman Nick Lampson (D-TX). "Promising technologies are being developed to improve the efficient production of electricity from coal-fired plants which could help reduce CO2 emissions. I look forward to learning more about deployment of technologies that can capture CO2 from new and existing power plants and keep it out of the atmosphere." Ranking Member Bob Inglis (R-SC), shared these sentiments adding "…today, we must work to make sure that our coal consumptions is as emission-free and energy efficient as possible, bringing benefits to both industry and the environment."

Gardiner Hill from BP described how carbon capture sequestration works. Hill said "The best rocks for CO2 storage are depleted oil and gas fields and deep saline formations. There are layers of porous rock, such as sandstone, more than half a mile underground, located underneath a layer of impermeable rock, or cap-rock, which acts as a seal." Congressman Inglis asked the panel how readily available are such locations for carbon dioxide storage. Finley admitted that the Atlantic states do not share as much porous rock formations that are more feasible for carbon storage as do the western states, however, infrastructure, such as pipelines, could be built to move the CO2. Dr. Bauer added "97% of coal plants have locations 50-100 miles that are suitable for Carbon Capture Sequestration (CCS)."

Congressman Inglis went on to ask how much carbon can be stored in the U.S. Bob Finley from the Illinois State Survey cited the Carbon Sequestration Atlas of the United States and Canada published by the Department of Energy which estimates about 3,500 billion tons of storage capacity in the region. Bauer added that there is hundreds of year's worth of storage in the U.S.

Congressman Lampson's asked about the probability of CO2 release and the overall safety of carbon sequestration. Finley explained that the same methods used for enhanced oil recovery when drilling for oil and gas are used when injecting CO2 into the ground for storage. He went on further to say that "Since 1983, more than 600 million tons of pressurized CO2 have been injected...The safety record of this process has been excellent with not a single incident of loss of life." However, he did admit that there is some probability of leakage and it is difficult to quantify how much might leak from any given reservoir. Hill pointed out that there are real examples of CO2 stored in public places and there is no danger.

In his testimony, Hill emphasized the importance of starting large scale demonstrations (about 1 million metric tons) now so they can be studied, for potential leaks and how to best develop long-term monitoring. Through CCS he said that there could be a reduction in emission. He further pressed on the safety of injecting carbon in the ground stating that "secure storage increases with time; the reservoir acts as a sponge and CO2 cannot escape through the pore throats and some gets dissolved in water." Representative Jerry Costello (D-IL) asked Hill where large scale demonstrations were taking place. Hill responded in the Sax formation in the North Sea there is a 1 million metric ton demonstration taking place.

The hearing gradually shifted from CCS to current coal reserves and the cost of this large endeavor. Congressman Costello gave an estimate that there is 250 years worth of coal reserves and he asked the panel what they thought of that estimate. Dr. Finley quoted from the DOE-Energy Information Administration that the U.S. presently uses about 1 billion tons of coal a year and reserve estimates put about 247 billions of coal left in the U.S. so those estimates given are correct. Representative Gabrielle Giffords (D-AZ) asked about the obstacles that must be overcome for CCS to work. Bauer answered that educating the public on CCS and changing over to new energy sources. Bauer concluded, "it will be hard to change over while still keeping up with the economy." Dalton said that the main problem of carbon capture is the energy required to get it in the ground. Dalton noted that "right now it takes about 30% of the power generated to inject carbon in the ground; we're trying to get that number down to 10-15%." This would mean an increase in cost to consumers when compared to other coal-fired plants that do not use CCS technology. However, advancements in coal burning technology will help reduce the energy need for carbon injection.

The committee also questioned new coal technology. Rencheck outlined two new types of coal-fired plants: Ultrasupercritical plants and integrated gasification combined cycle (IGCC) plants. Some of AEP's new projects include using some of the captured CO2, about 1.5 million metric tons, for enhanced oil recovery as outlined by their commercial performance verification project. In the second round of questioning Inglis inquired as to how pre-combustion capture works. Hill answered the question in laymen's terms that basically the coal is only partially burned but not completely, the result is a release of pressurized hydrogen and carbon, the hydrogen is used for power and the pressurized carbon is injected into the ground without the additional need of energy to pressurize it.

Overall the committee seemed open and excited to the possibilities of the new efficient coal burning technology and CCS technology. Rencheck did caution the committee about its support of near-zero-emissions coal-based energy. Rencheck said "Commercially engineered and available technology to capture and store CO2 does not economically exist today and we strongly recommend that any legislation you adopt reflect this fact."

-DM

Senate Appropriations - Subcommittee on Energy and Water Development
hearing on the politics and funding necessary for reducing U.S. oil dependence

May 08, 2007

Witnesses:
Frederick W. Smith, Chairman, President and CEO, FedEx Corp.
Retired Adm. Gregory G. Johnson, Former Commander, U.S. Naval Forces, Europe
Robert Wescott, President, Keybridge Research
Alexander Karsner, Ast. Secretary of Energy for Energy Efficiency and Renewable Energy
R.M. "Johnnie" Burton, Director, Minerals Management Service, Department of the Interior

The Senate Appropriations Subcommittee on Energy and Water Development met on May 8, 2007 to discuss reducing U.S. dependence on foreign oil. Rising prices at the gas pumps as well as security and economic concerns continue to provide impetus for finding ways to achieve independence from foreign oil.

Chairman Byron Dorgan (D-ND) noted that the United States uses about 25% of the 84 million barrels of crude oil extracted from the earth each day, and 70% of this oil is used for transportation related purposes. "We need to find ways to both conserve [oil]… and produce more domestically," he remarked, adding that increasing auto efficiency and expanding biofuel production would both help to lessen dependence. Dorgan also commented that any increased oil production in the U.S. should simply be "a bridge to get to the next technology," such as hydrogen fuel cells. "Ultimately I want to disconnect from our need for and our demand for oil," he added.

Ranking member Pete Domenici (R-NM) focused on maximizing U.S. energy output. In reference to off-shore drilling, he stated "it is our natural gas and our oil, and we must use it." Senator Larry Craig (R-ID) echoed Senator Domenici's thoughts on expanding off-shore drilling, suggesting that the entire eastern and western seaboards be opened to petroleum exploration and production, as "it is a matter of needing it all." He brought along a poster of the U.S. showing large swaths of ocean which are currently not open to drilling, and the relatively small area of the Gulf of Mexico in which all U.S. off-shore production takes place. Craig also raised concerns about not losing raw vehicle power while increasing fuel efficiency, citing his recent meetings with the Idaho State Snowmobile Association, whose members often tow heavy loads through mountainous regions.

Fred Smith remarked on how unusual it was for him to encourage government intervention. As the president and CEO of FedEx, he typically is pro-business and anti-regulation. However, he stated that government regulation is needed in order to promote the use of more fuel efficient vehicles. FedEx has a fleet of 77,000 trucks and 677 aircraft, most of which run on diesel engines. If federal regulations do not require competitors to switch to more expensive hybrid vehicles, it is not financially viable for FedEx to self-impose fuel efficiency standards. Smith suggested tax credit expansions as a way to encourage all shipping companies to switch to more efficient fleets, and also stated that any efficiency regulations should also apply to light trucks, not just cars. Secretary Karsner seconded this idea, stating that if regulations were not mandatory, the Senate would be "asking leaders of industry to voluntarily erode their profit margins," but added that government funding will not be enough on its own.

Smith also expounded on the nature of international oil producing regions, saying that the U.S.'s supply of oil "is determined by a cartel" of oil producing countries. Similarly, Senator Craig commented on the power some of these nations hold over the U.S., saying that "[oil producing countries] in the name of petro-nationalism have learned how to jerk the tail of the giant." Admiral Gregory Johnson agreed that oil dependence "is one of the most serious economic and national security challenges facing this nation," adding that a "handful of maritime chokepoints" present a major security risk. Smith, Craig, and Johnson all endorsed the use of multiple strategies, including increasing domestic oil production and tightened fuel efficiency standards in order to reduce the economic threats posed by dependence on foreign oil.

Johnnie Burton expressed optimism for increased domestic oil production, commenting that the Mineral Management Services' new 5-year Outer Continental Shelf Oil and Gas Leasing Program would result in "a mean estimate of an additional 10 billion barrels of oil, 45 trillion cubic feet of gas over a 40-year time span, and $170 billion, in today's dollars, in net benefits for the nation." However, Burton also acknowledged that the lack of infrastructure on the Atlantic and Pacific seaboard would significantly delay oil production if these areas were opened to exploration. When questioned about whether oil might be present around the Florida coast, where off-shore drilling is currently prohibited, she stated that "there is logically a lot of probability that the eastern gulf has a lot of resources." She suggested that the lack of seismic survey activity in the area was due to companies having no incentive to financially commit to exploring an area in which drilling is not allowed, and not due to a lack of oil in the region. "The geologic patterns do not respect political boundaries," she concluded.

In general, Republicans and Democrats seemed eager to reduce dependence on foreign oil through a combination of strategies, although there was not an agreement on the degree to which each strategy should be implemented. Senator Domenici stressed the need for a bipartisan solution to reducing dependence on foreign oil, saying "I hope we can all get together and decide what we are going to do."

-PS

House Foreign Affairs Committee, hearing on
"Foreign Policy and National Security Implications of Oil Dependence"

March 22, 2007

Witnesses:
John M. Deutch, Professor, Massachusetts Institute of Technology, former director of the Central Intelligence Agency
Dr. Daniel Yergin, Chairman, Cambridge Energy Research Associates, Inc.
Dr. Ariel Cohen, Senior Research Fellow, Heritage Foundation

The House Foreign Affairs Committee convened on Thursday, March 22, 2007 to discuss foreign policy and the national security implications of America's dependence on foreign oil. Spurred by President Bush's 2006 declaration that the United States is "addicted to oil" and by tenuous foreign relations in the oil-rich Middle East, security has been a limelight issue in both the House and the Senate.

"The United States is gorging itself on oil from overseas, a diet that is both unsustainable and unhealthy - and it seriously weakens our nation," Chairman Tom Lantos (D-CA) declared in his opening statement. Not only does the US, with only 5 percent of the world population, consume a quarter of the world's oil supply, six of the top ten oil-exporting countries with which the US does business "rank at the bottom third of the world's list of most corrupt countries." Lantos called for higher corporate average fuel economy (CAFE) standards, for putting "real resources" into research and development and for "stepping up national efforts at energy conservation."

Ranking Member Ileana Ros-Lehtinen's (R-FL) opening statement mirrored that of the Chairman. Calling oil a weapon being "leveraged by enemies of the US and the West in general…to undermine our foreign policy efforts overseas," Ros-Lehtinen commented that the problem "regarding our dependence on foreign sources of oil is not economic or technological, but political." The fact that the vast majority of the world's petroleum is concentrated in regions that are either politically unstable or actively anti-US presents a continued threat to American security.

However, as Chairman Lantos noted, "even if the US completely switched to some other energy source tomorrow and no longer imported a drop of oil, we could remain vulnerable to oil-related disruptions in the rest of the world" because other countries share our addiction.

The opening statements of the other committee members reflected strong, bipartisan concern about the issue. "This is one of the most important questions of our day as to how we untangle foreign policy considerations from our overdependence on foreign oil," said Rep. Jeff Fortenberry (R-NE). "We didn't leave the stone age because we ran out of stone," commented Rep. David Scott (D-GA). "Nor will we leave the oil age because we ran out of oil. What will happen first is we will run out of civilization. That's how profound this is."

In their testimonies, the witnesses were united in their opinions about what steps the US must take to achieve energy security. All three emphasized that energy independence, defined as competitive local production of all the energy we need, is, as Dr. Deutch put it, a "myth." Energy security, however is an attainable goal and one the US needs to take immediate action to achieve.

"We will not run out of oil," said Deutch, though he warned that the real price of oil should be expected to increase. He also warned that US consumption will increase over the next several decades and that much of that demand will be supplied by "politically fragile and unfriendly states of the Middle East."

In fact, by 2017 the US will be importing approximately 68 percent of its oil, according to Dr. Cohen. Region by region, Dr. Cohen discussed the threats to America's oil supply. As Dr. Yergin indicated, there is rising concern about "oil power," or "the use of energy as a political instrument rather than a commercial commodity." The Arab world in particular consciously wields their oil wealth as a weapon against the US and the rest of the developed world. Dr. Cohen quoted Iran's Supreme Leader Ayatollah Ali Khamenei, who in June 2006 stated that "if Americans make a wrong move toward Iran, the shipment of energy will definitely face danger."

"Energy independence, defined as competitive local production of all the energy we need, remains a mirage. It is energy security that we need to accomplish," said Dr. Cohen.

In his testimony, Dr. Yergin listed ten "fundamentals of energy security." Topping the list were diversification of supply, resilience (a "security margin" in the energy supply system that provides a buffer against shocks and facilitates recovery after disruptions), and high-quality and timely information. Together, these principles underpin energy security. Yergin also emphasized Cohen's statement that the US first needs to "secure the stability of the oil supply to the best extent possible in cooperation with traditional US allies, while bringing on board the emerging major oil consumers, such as India and China." Second, all three men argued, the America needs to expand its energy mix, encourage investment and innovation in truly competitive alternative fuels and technologies, and work with suppliers and consumers to expand the transparency of, and international access to, existing oil supply by international oil companies.

In response to Chairman Lantos' question about the relationship of nuclear energy to national security, Dr. Yergin noted that less than 2 percent of electricity is generated by oil. In fact, ground and air transportation accounts for almost all of the oil-based energy use in the United States. Thus, the expansion of nuclear energy would have little effect on import of foreign oil until, as Dr. Deutch noted, electric vehicles compose a significant proportion of the transportation sector.

Ranking Member Ros-Lehtinen questioned the panelists about the potential creation of an OPEC for liquefied natural gas (LNG), which would threaten the global supply of natural gas. Although the US has substantial natural gas reserves, the nation is projected to import an increasing fraction of our natural gas in the future. Dr. Yergin did not discount the possibility, but suggested that the "notion that there is going be an organization that will function like OPEC in the gas area is not as high." "The LNG business is a very capital-intensive business; you have an enormous amount of money tied up in it," making setting volume quotas and other control mechanisms particularly undesirable.

Acknowledging Yergin's exhortation to "recognize the reality of integration," Rep. Diane Watson (D-CA) asked what can be done diplomatically and politically with some of the countries we know are in turmoil right now but have the resources we will need for the future?" In response, Dr. Deutch said that "both our private sector companies and our government would be well-advised to always work for better governance in these countries where it is in our interests to see improved social and economic circumstances for the people." Improved social and economic conditions lead to a stable country and a secure, dependable supply of energy.

Full text of the witness testimony is available here.

-EG

Senate Committee on Energy and Natural Resources
Oversight Hearing on the EIA Annual Energy Outlook

March 1, 2007

Witness:
Guy Caruso, Administrator, Energy Information Administration, Department of Energy

In late February, the Energy Information Administration (EIA) released its full Annual Energy Outlook 2007 (AEO2007) report, which provides projections and analysis of domestic energy consumption, supply, prices, and energy-related carbon dioxide emissions through 2030. Based on Federal and State laws and regulations in effect on or before October 31, 2006, the report analyzes multiple different scenarios that help lawmakers determine the future course of energy supply and demand. "Think of this outlook as 'this is the path we're on if we keep doing what we're doing,'" said Caruso.

Senator Lisa Murkowski's (R-AK) opening statement neatly sums up the mood of the hearing. "I always look forward to the annual outlook," she said. "I wish our outlook looked better." Despite the concern on Capitol Hill about climate change and renewable energy, the AEO2007 failed to predict a greener future. The report projects an increase in total energy consumption of 31 percent between 2005 and 2030, 85 percent of which is accounted for by fossil fuels. Coal consumption in particular will increase as higher natural gas prices make coal the fuel of choice.

Key among the concerns voiced in the hearing was the future of biofuels, nuclear power, and natural gas. In his 2007 State of the Union address, the President challenged the nation to increase the supply of renewable fuels to 35 billion gallons by 2017. Ethanol use in the AEO2007, however, grows from 4 billion gallons in 2005 to 14.6 billion gallons in 2030, not even half of what the President has requested in half the time. "Is it possible to reach the President's goal of 35 billion gallons by 2017?" asked Chairman Jeff Bingaman (D-NM). Given current technology, no, was Caruso's reply.

Electricity production by nuclear energy, a favorite topic of Senator Pete Domenici (R-NM) and other senators, is projected to fall to about 15 percent by 2030. "It seems that the more we do, the less we get," commented Senator Domenici. Although more nuclear power plants are slated for construction between now and 2030, Senator Domenici pointed out that a lack of skilled welders and steel workers is certain to hinder efforts to develop nuclear power as a significant source of energy. He also commented that the United States simply lacks the capacity to build certain components of a nuclear power plant and, at present, depends on South Korea for these parts.

In fact, the "business as usual" scenario doesn't predict a particularly bright future for any renewable source of energy, or for the United States as a nation independent of foreign energy. Non-hydrologic renewable energy sources presently account for about 2.2 percent of the nation's energy, with wind power as one of the top contributors. This number is projected to grow by a mere 1.4 percent by 2030, a sobering figure to advocates of clean energy. More disturbing yet are the AEO2007 projections that net liquid petroleum imports will account for as much as 67 percent of the total liquids supply by 2030. Not surprisingly, transportation accounts for 94 percent of the projected increase in liquids consumption, according the Caruso's testimony. Light-duty vehicles will dominate liquids consumption.

As a result of a continued reliance on coal for electricity generation and on petroleum fuels in the transportation sector, carbon dioxide emissions from energy use are projected to increase at an annual average rate of 1.2 percent. However, the emissions intensity of the U.S. economy is projected to fall by about 1.7 percent per year. Though encouraged to hear that the U.S. economy is expected to emit less intensely over the next two decades, the decline failed to satisfy the senators. "We need to declare war," said Senator Larry Craig (R-ID). "We need to declare war in the sense of the deployment of resources and talent in a way we have not done before to focus on our energy needs."

Full text of the witness testimony is available here.

House Appropriations Committee, Subcommittee on Energy and Water Development, hearing on "10-Year Energy Research and Development Outlook"
February 28, 2007

Witnesses:
Panel I
Guy Caruso, Administrator, Energy Information Agency
Jim Wells, Director, Natural Resources and Environment, U.S. Government Accountability Office

Panel II
Dr. Daniel Kammen, Berkeley Institute of Environment, University of California, Berkeley
David Hawkins, Director, Climate Center, Natural Resources Defense Council
Dr. Ernest Moniz, Director of MIT Energy Initiative, MIT
David Nemtzow, energy consultant
Dr. John DeCicco, Senior Fellow for Automotive Strategies at Environmental Defense
W. Wayt Gibbs, Contributing Editor, Scientific American and Executive Editor, Intellectual Ventures

The Energy subcommittee of the House Committee on Appropriations held a hearing on the ten year energy research and development outlook on February 28, 2007. Chairman Pete Visclosky (D-IN) and Ranking Member David Hobson (R-OH) expressed grave concerns about the effectiveness of energy R&D and about the trend of decreasing funding for such activities over the past 30 years.

Guy Caruso summarized the Energy Information Administration's latest report, the Annual Energy Outlook for 2007, which was just released. The report projects U.S. energy supply and demand for a 30 year period and he noted a 30% increase in demand, mostly for transportation. Oil will remain the dominant fuel for transportation through 2030 and oil imports will remain at about 60% until 2017 and then the demand for foreign oil will increase until 2030. Natural gas imports will increase and many new coal plants will be fired up. In terms of emissions, the report projects carbon dioxide will increase from 6,000 million tons now to about 8, 000 million tons in 2030. Caruso said that although these numbers are very pessimistic, he wanted to end his testimony on an optimistic note. This comment drew faint laughter from the committee and the audience. Caruso's optimistic comment was that the EIA had inaccurately predicted energy demand for the early 21st century in the 1970s by more than 50%. In fact, due to conservation, efficiency and technology, the U.S. demanded much less energy than predicted in the 1970s.

Jim Wells followed Caruso and noted that his testimony would be pessimistic. The GAO has just completed a report, entitled "Key Challenges Remain for Developing and Deploying Advanced Energy Technologies to Meet Future Needs", which indicates that energy R&D at the Department of Energy has been a failure. First, funding for non-defense energy R&D has declined by 85% since 1978 and second, the R&D that was completed has not reduced the dependence of the U.S. on fossil fuels. Alternative fuels made up about 4% of the total energy portfolio in 1978 and makes up only 4% of the portfolio today. Wells noted that technological advances as well as capital investment costs generally raise the price of the alternative energy resource that is developed while consumers demand the cheapest energy and are not willing to support the added costs of alternatives. Wells also noted that many states are now acting on their own to increase their use of alternative energy sources and many other countries, including Brazil, Denmark, Germany, France and Japan, have been successful in using alternative energy resources. Wells concluded that cheap energy in the U.S. is probably now gone and the future will be an "unsettling" time for consumers.

Rep. Chet Edwards (D-TX) noted the U.S. is headed for "a serious train wreck" if we don't change our supply-demand equation. He asked Caruso if the world is running out of oil and if the U.S. has made any effort to obtain oil production and reserve data from foreign countries. Caruso replied that EIA does not request such data from countries, but relies on analyses of the geology by the U.S. Geological Survey and the Minerals Management Service. Wells indicated that the GAO has just completed a report on peak oil for Rep. Roscoe Bartlett (R-MD) and the report will be publicly released very soon. Edwards also asked about the accuracy of the EIA reports and Caruso replied that the supply and demand data probably has a 2 to 3% uncertainty, but that price projections have been inaccurate, especially over the past 5 to 10 years.

Rep. Michael Simpson (R- ID) asked Caruso if he agreed with the GAO report. Caruso said he agreed with its general findings, but EIA does not have the technical expertise to address the technology concerns mentioned in the report. DOE has only spent $50 billion on energy R&D since 1978 and with continued reductions in future spending, the department will be unable to meet expectations.

Rep. Steve Israel (D-NY) noted that the military spends $10.6 billion annually on energy needs and the Department of Defense (DOD) consumes about 97% of the energy used by the federal government. Even with these huge costs, significant dependence on fossil fuels and national security issues, DOD only spends $500 million on defense-related energy R&D. Israel asked hypothetically if the Pentagon could be a test bed for energy R&D leading to enhanced efficiency and a more diverse energy portfolio. Answering his own question, he suggested that the government could not develop the technology but must rely upon industry to do so. He suggested the military demand more fuel efficient vehicles from industry because "Detroit will respond to purchase orders rather than federal mandates."

Hobson interjected that he has been trying to get the military to improve its energy efficiency and diversity for years. He noted aircraft could use Fischer-Tropsch technology developed by Germany decades ago to improve their efficiency. He suggested that turf wars were the biggest barrier to getting DOD to work with DOE on efficient applications of energy R&D. Hobson then asked about nuclear power, noting that China is building nuclear power plants and the U.S. needs to build at least 30 nuclear power plants, but has a problem with waste storage.

Rep. John Doolittle (R-CA) asked if the incentives in the Energy Policy Act of 2005 would ensure that at least 9 new nuclear power plants would be built by 2019. Caruso said yes, but Hobson interjected that because of the waste storage problem, none of these new plants would be able to get a license.

Rep. Zach Wamp (R-TN) thought a hybrid approach to interim waste storage was needed to resolve the nuclear waste problem. He also suggested the licensing problem would not be an issue because the 9 new plants will be built at existing nuclear power plant sites and thus no new licenses would be required. Hobson once again interjected that the plant operators would still get sued because of the waste storage problem. Wamp then turned his attention to biofuels and supported additional incentives for cellulosic plants in legislation. Wamp asked how many ethanol plants are now in the planning stage and Caruso responded that 75 to 80 new plants are being planned. Wamp concluded by noting the importance of switch grass, which grows naturally in the south, as a future biofuel.

Chairman Visclosky shifted the questioning from fundamental research to deployment research and asked Wells what progress had been made in deployment research. Wells answered by noting that there have been 23 tax credits for deployment, with $82 billion for fossil fuels and $11 billion for ethanol.

The second panel talked about the U.S. energy R&D outlook for the next 10 years. All of the witnesses agreed that the federal government and industry need to spend more on energy R&D, but the government needs a strategic plan for spending and needs to reduce turf wars among federal agencies over jurisdiction for funds. Kammen noted some success stories in energy efficiency and diversity in the states; for example California, New York and Rhode Island save about 40% more energy than other states without any specific state mandates for efficiency and diversity. Energy R&D can have huge pay-offs if governments and consumers make efforts to apply what has been advanced and are willing to pay a bit more for the alternatives.

Getting back to the costs of energy R&D for the federal government, which was the focus of the first panel, Kammen provided a comparison of additional spending (using constant 2002 dollars) for major R&D programs over the duration of the program. The Manhattan project cost $25 billion over 3 years, the Apollo program cost $127.4 billion over 10 years, the Reagan defense program cost $100.3 billion over 8 years and the doubling of the budget for the National Institutes of Health cost $32.6 billion over 5 years. If Congress scaled up energy R&D funding by 5 times current levels, the government would need to spend an additional $47.9 billion over 10 years. When compared to other major programs this looks like a very reasonable increase and Kammen then specified which programs would be most worthwhile to scale up. Such increases applied strategically, Kammen suggested, could greatly enhance energy alternatives and alleviate the future energy problems outlined by Caruso and Wells in their earlier testimony.

Moniz noted the need for a rational energy portfolio and synergistic policies. While the U.S. will continue to rely on a fossil fuel base, efficiency and conservation, alternative transportation fuels and carbon-free electricity should be enhanced now. With regards to nuclear power, the U.S. should develop interim waste storage facilities, continue to develop the Yucca Mountain geologic waste repository and continue R&D on closed and open nuclear fuel cycles.

Representatives peppered the second panel with many questions about the best alternatives and how to fix the energy R&D programs at DOE. In the end the witnesses and the committee members concluded that a well-funded, diversified and well-planned R&D portfolio was essential.

-LR

House Natural Resources Subcommittee on Energy and Mineral Resources
Hearing on the Administration's FY 2008 Budget Requests for the MMS,
BLM, Energy and Minerals programs, OSM, Minerals Geology Program of the Forest Service, and USGS
February 26, 2007

Witnesses:
Johnnie Burton, Director, MMS
Jim Hughes, Acting Director, BLM
Mark Myers, Director, USGS
Brent Wahlquist, Acting Director, OSM
Fredrick Norbury, Associate Deputy Chief, National Forest System, U.S. Forest Service

The House Subcommittee on Energy and Mineral Resources convened Tuesday afternoon to discuss the FY 2008 budget requests for the Minerals Management Service (MMS), the Bureau of Land Management (BLM), the Office of Surface Mining Reclamation and Enforcement (OSM), the U.S. Geological Survey (USGS), and the U.S. Forest Service (USFS). Energy and non-energy mineral commodities constitute the nation's second highest source of revenue, generating approximately $10 billion annually. According to Mr. Hughes' testimony, "in 2008, public lands will generate an estimated $4.5 billion in revenues, mostly from energy development." The MMS manages oil and natural gas production activities that generate over $7 billion in revenue per year for the Nation, States, and American Indians, and minerals production on Forest Service land typically exceeds $2 billion per year, about $125 million of which fills federal coffers.

In his opening statement, Chairman Jim Costa (D-CA) stressed the subcommittee's oversight responsibilities, promising to "ensure accountability and transparency." He noted that "hardrock mining law has not changed since 1872" and that it is sorely in need of revision. However, the three representatives who attended the hearing were primarily concerned with whether the President's FY 2008 budget requests would be sufficient to meet the needs of the testifying agencies and how the funds would be used. They also asked about cuts in funding to certain programs, such as geothermal energy initiatives.

As one of the most lucrative federal agencies, a tight 2008 budget poses less of a concern for MMS than for the other testifying agencies. The 2008 request for direct appropriations is $161.5 million, $3.2 million above the FY 2007 continuing resolution level. The request includes funding to implement the Outer Continental Shelf (OCS) 5-Year Oil and Gas Leasing Program, facilitate the exploration and development of ultra-deepwater oil and gas reserves, enhance the management of mineral revenues, and fulfill the President's plan to double the Nation's Strategic Petroleum Reserve.

However, concerns about MMS were less about budget woes than about the agency's audit system and ensuring a resolution to the 1998/1999 outer continental shelf (OCS) leasing debacle. Leases made during these years omit essential price threshold language that triggers royalty payments to the federal government, a mistake that has already resulted in a revenue loss of about $1 billion for the federal government. When asked, Ms. Burton recommended "enticing [the oil companies] with sugar to come to the table and re-negotiate the leases."

Also in question was the MMS's auditing system, which has decreased the number of audits by 22 percent and the number of auditors by 15 percent since 2000. In place of audits, MMS conducts so-called compliance reviews, which "ensure that people pay what they need to pay," said Ms. Burton. MMS has attempted to make the rules and regulations for compliance reviews clearer, making it easier for industry "to get it right." Compliance reviews also have a higher payoff: for every dollar MMS spends on a compliance review, it gets $3.27 in return. An audit, in contrast, only produces slightly over $2 in return.

The Office of Surface Mining Reclamation and Enforcement (OSM), which deals "with coal and only coal" and associated reclamation efforts, is also slated to enjoy a budget increase in the President's budget request. OSM's FY 2008 budget request totals $168.3 million in discretionary spending. Because State and Tribal grant funding is no longer subject to appropriation, the net increase over FY 2007 levels is $9.2 million. A full fifty percent of OSM's budget is passed on to the States and Tribes in the form of regulatory and reclamation grants, as well as watershed cooperative agreements and high priority project funding. The remaining portion of the budget provides funding for OSM's internal operations, which will include the implementation of a new financial system in 2008.

The FY 2008 President's budget request for BLM is $1.812 billion for major appropriations, which includes a $3.1 million increase to support oil and gas inspections and monitoring on BLM land. Among the projects planned for 2008 are the implementation of the Remote Data Acquisition for Well Production (RDAWP) Project and the Automated Fluid Minerals Support System, both of which will help streamline the collection and inspection of wellhead production data. Programs such as geothermal, however, are slated for budget cuts. When asked why, Hughes could only cite revenue concerns. Representative Louie Gohmert (R-TX) repeatedly asked Hughes if he had "a problem with the host counties getting 25 percent [of geothermal revenues] back." Hughes refrained from answering directly, but implied that the federal government would rather see a direct return for its investment. Chairman Costa asked whether the renewable energy technologies being developed on BLM lands are ever likely to do anything more than supplement the energy grid. Hughes replied with a firm "no," but noted that BLM operations currently power over a million homes and will soon have the capacity to power a million more with wind and solar technologies.

The fiscal year 2008 President's Budget requests $71 million for the Minerals and Geology Management program, a decrease from prior year levels that "reflects greater efficiencies." The Minerals and Geology Management program is responsible for the management of energy and non-energy mineral commodities, which generate over $2 billion a year. The program also oversees the restoration of hazardous waste sites located on Forest Service lands. According to Mr. Norbury's testimony, there are an estimated "2,000 abandoned and inactive mines on National Forest System lands requiring some type of cleanup."

The US Geological Survey also faces a number of budget challenges in the coming year, among them a $24 million decrease for the Minerals Resources Program. The President's FY 2007 budget request cut the Minerals Resources Program by $22 million. In preparing the FY 2008 request before the FY 2007 budget was completed in Congress, the administration used the FY 2007 request. Congress did not agree with the President's FY 2007 request however and in the final continuing resolution for FY 2007, Congress put back the $22 million in the Minerals Resources Program. This means that the President's FY2008 request is actually an even larger decrease for minerals. Although the program conducts a wide range of basic and applied research in national and international mineral assessments, the budget will "focus efforts in minerals resource assessments and research on projects that support the needs of Federal land management programs." In total, the USGS will absorb about $35 million in reductions to "lower priority programs." However, the budget provides funding for high-profile programs such as the Ocean Action Plan, the Natural Hazards Initiative, and the National Streamflow Information Program. Much to the relief of the committee, the Landsat Data Continuity Mission (LDCM) will also receive increased funding. "Geospatial is one of our highest priorities," said Chairman Costa.

-EG

Senate Committee on Energy and Natural Resources
Oversight Hearing on Oil and Gas Resources on the Outer Continental Shelf

January 25, 2007

Witnesses:
Honorable C. Stephen Allred, assistant secretary, Land and Minerals Management, U.S. Department of the Interior
Honorable Marjorie McKeithen, assistant secretary, Office of Mineral Resources, Louisiana Department of Natural Resources
Honorable Lisa Jackson, commissioner, New Jersey Department of Environmental Protection
Mr. J. Larry Nichols, Chairman and CEO, Devon Energy Corporation
Mr. Athan Manuel, director, Lands Protection Program, Sierra Club
Mr. Paul Siegele, vice president, Deepwater Exploration and Projects, Chevron


The Senate Committee on Energy and Natural Resources held a hearing on January 25, 2007 to receive testimony on oil and gas resources on the Outer Continental Shelf and areas available for leasing in the Gulf of Mexico. Under pressure to reduce the nation's dependence on foreign oil and natural gas, Congress reviewed the management and availability of energy resources on the Outer Continental Shelf (OCS). Of the 1.76 billion acres of Federal offshore lands on the OCS, about 600 million acres are not available for oil and gas leasing due to presidential withdrawals and congressional moratoria. According to the Department of the Interior's Minerals Management Service, the potential resources in the areas under remaining moratoria and withdrawal are estimated to be approximately 18 billion barrels of oil and 76 trillion cubic feet of natural gas. The Energy Information Administration projects a 25% increase in the nation's demand for energy over the next 20 years, the majority of which is expected to be supplied by fossil fuels.

Assistant Secretary Allred's testimony detailed the status of federal lands on the OCS, particularly the estimated production value of federal offshore lands currently withheld from development under moratoria or withdrawals. Noting the difficulty of estimating resource potential in areas where leasing has been prohibited (the last geophysical surveys and drilling exploration occurred more than 25 years ago), Mr. Allred suggested that as much as 17.8 billion barrels of oil and 76.5 trillion cubic feet of recoverable gas are contained in areas that are currently unavailable for leasing. The Gulf of Mexico Energy Security Act (GOMESA), signed into law in December 2006, opens up two large deep-water tracts to leasing, providing access to a potential 637 million barrels of oil and 2.8 trillion cubic feet of natural gas, according to Mr. Allred's report.

Ms. McKeithan, speaking for the Louisiana Department of Natural Resources, expressed enthusiasm for the development of Outer Continental Shelf energy resources, noting that Louisiana is "first in total crude oil production, first in OCS natural gas production, first in OCS revenue generated for the federal government," among a long list of other "firsts."

In contrast to McKeithan's enthusiasm for OCS development, Ms. Jackson was vehemently opposed due to environmental and economic reasons. Ms. Jackson noted that coastal revenues are New Jersey's "largest economic sector." She also expressed dismay at Virginia's interest in offshore drilling, as "the physical processes in the ocean do not honor administrative boundaries." The Sierra Club speaker, Mr. Athan Manuel, also opposed opening more of the OCS to offshore drilling, citing leakages, spills, environmental degradation, and the environmental and economic impact on coastal communities.

Representatives from the petroleum industry also spoke. Mr. Nichols, Chairman and CEO of Devon Energy Corporation, stressed America's need for OCS resources as an integral part of the nation's energy portfolio. Citing the Independence hub in the Gulf of Mexico, Mr. Nichols noted that "that single gas hub is going through the energy equivalent of windmills covering 300 square miles." Both he and Mr. Seigle reminded the committee that resource estimates are based on available information. "In the Central and Western Gulf of Mexico we have produced three times more natural gas than the first comprehensive resource estimates identified - and we now believe the Gulf still contains nearly five times those original estimates," said Mr. Nichols.

Senator Ron Wyden (D-OR), however, was less enthusiastic about the energy potential of moratoria-bound tracts, questioning the inaction of oil companies on OCS tracts they are already leasing. "To me it just defies common sense to argue for opening new, environmentally sensitive areas to oil and gas drilling when so much land already leased for oil and gas drilling in environmentally sensitive areas just sits out there idle," he said.

Noting Mr. Allred's admission that many of the estimates of potential energy resources on the OCS are based on data collected twenty-five years ago, Senator Pete Domenici (R-NM) commented that "we are not dealing with what is relative to the offshore today…The best we can do is to get busy providing you with sufficient money so you can do the sort of long and lengthy evaluation that we have asked you to do with reference to putting the geological experts out there to tell us what's in certain areas so we can tell the American public what they own and so we can be honest with them about what kind of damage will be caused and what kind won't."

Senator Mary Landrieu (D-LA) directed her final comments to Ms. Jackson and other northeastern states. Noting that the nation's oil and gas resources come primarily from Louisiana and Alaska and are used primarily by the northeastern states, she said "We're happy to shut these pipelines about right there [indicating the eastern states] until the northeast decides what it can contribute to this grid…Every part of this country has to do something."

Full text of the witness testimony is available here.

-EG

Senate Committee on Energy and Natural Resources
Oversight Hearing on Oil and Gas Royalty Management

January 18, 2007

Witnesses

The Honorable Earl Devaney, Inspector General, U.S. Department of the Interior
The Honorable Mark Gaffigan, Acting Director, Natural Resources and Environment, U.S. Government Accountability Office
The Honorable Stephen Allred, Assistant Secretary, Land and Minerals Management, U.S. Department of the Interior

The Senate Committee on Energy and Natural Resources held a hearing on January 18, 2007 to investigate the Department of the Interior's (DOI) mismanagement of deepwater royalty relief. The Outer Continental Shelf Deep Water Royalty Relief Act of 1995 was enacted in order to encourage high-cost deepwater petroleum exploration and production in the Gulf of Mexico. To ensure that oil companies could recapture their initial capital investment - but not receive windfall profits - the royalty relief was limited by defined volume suspension and price thresholds. Companies would be required to pay royalties once the price thresholds of $34 per barrel of oil and $3.50 per 1000 cubic feet of natural gas were exceeded. However, price thresholds were omitted from the deepwater leases that oil and drilling companies entered into during 1998 and 1999. Presently, the omission of price threshold language has caused a revenue loss of about $1 billion for the federal government. If left uncorrected, the mistake could cost the Treasury about $10 billion.

According to the Mineral Management Service (MMS), 1,032 leases were issued during this period without price thresholds, 570 of which are still active. During the hearing, Inspector General Devaney was questioned about his investigation into the lack of price thresholds in Gulf of Mexico oil and gas leases. The Inspector General found that the omission was first brought to the attention of the former Associate Director for Offshore Minerals Management in 2000, who chose not inform the former MMS Director in favor of "working out a solution within the Office of Offshore Management." Further evidence suggests that the present Director knew of the omissions as early as 2004.

However, both Devaney and Allred agreed that Burton's failure to address the issue when she became aware of the problem in 2004 was unintentional. Devaney said that Burton appeared surprised when she learned that she had been informed of the problem in 2004. Allred defended the Director's integrity, saying "I see no reason yet to make a change in her status."

In his report, Inspector General Devaney expressed his belief that the omission of price threshold language in the 1998 and 1999 deepwater oil and gas leases was "not a deliberate decision. It was a mistake."

In his opening statement, Committee Chairman Jeff Bingaman (D-NM) stated that, having read the inspector general's report released that morning, "the entire matter raises serious questions about management and organization at the Department and the adequacy of resources, particularly in the Solicitor's Office." The inspector general's report also indicates that MMS has reduced the number of auditor positions by over 20% since 2000. Senator Ron Wyden (D-OR) expressed his disbelief that with all that has come out as far as the audit process is concerned, "the government pretty much takes the oil company's word for what's going on." Inspector General Devaney confirmed Senator Wyden's observation, stating that "It's more or less an honor system."

Senator Bingaman also stated his concern about pending litigation brought by Kerr-McGee Oil and Gas Corporation (which was recently acquired by Anadarko Petroleum Corporation) relating to this same deepwater royalty relief program. The lawsuit challenges the authority of the Secretary to impose price thresholds for leases issued in 1996, 1997, and 2000. Mr. Gaffigan indicated in his report that, depending on the outcome of this litigation, up to $60 billion could be lost in additional forgone royalty revenue.

Despite holdouts such as Exxon-Mobil and Kerr-McGee, some larger oil companies have agreed to resolve the royalties problem with the Department of the Interior, among them Marathon, Conoco-Phillips, BP, and Shell. These agreements account for an estimated 20% of future production from these leases. However, hundreds of leases remain to be renegotiated. A key issue during the hearing was how the issue of the missing royalty payments could be resolved.

Stephen Allred, the assistant secretary for land and minerals management, said that holdout companies are waiting to see how Congress responds to the issue. He suggested that Congress create new industry incentives, such as allowing longer terms for deepwater leases, to encourage these companies to reach agreements.

Others disagreed with this stance. Senator Byron Dorgan (D-ND) argued against offering incentives to encourage renegotiation: "I don't think we need a lot of sugar here…we should give you the tools to say to these companies: "you want to keep bidding? Then own up on this issue to a mutual mistake. We made it in the agency perhaps, but everyone understand it's an omission and a mistake. Own up to it and you'll be a partner here and keep bidding. If not, go somewhere else because we don't need you."

Republican Senators Pete Domenici (R-NM) and Craig Thomas (R-WY) cautioned the committee to proceed carefully. "We should know that the eyes of the world and Mr. Chavez and Mr. Putin are watching how we treat shareholders and property and contract rights on federal lands" said Domenici.

Bingaman, who is considering legislation on a number of royalty issues, said he was hopeful the hearing would lead to "concrete, constructive steps such as increased resources where they are needed, any warranted management reforms, and legislative solutions as required."

Full text of the witness testimony is available here.

-EG

Sources: Environment and Energy Daily; Washington Post; New York Times; Senate Committee on Energy and Natural Resources; Hearing testimony.

Contributed by Erin Gleeson, AGI/AAPG Spring 2007 Intern; Paul Schramm; AGI/AIPG Summer 2007 Intern; David McCormick, AGI/AIPG Summer 2007 Intern; Sargon de Jesus, AGI/AIPG Summer 2007 Intern; Laura Bocher, AGI/AIPG Summer 2008 Intern; Jillian Luchner, AGI/AIPG Summer 2008 Intern; and Merilie Reynolds, AGI/AAPG Fall 2008 Intern .

Please send any comments or requests for information to AGI Government Affairs Program.

Last updated on September 30, 2008.

 
 

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