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Hearing Of The House Science And Technology Committee - New Directions For Energy Research And Development At The U.S. Department Of Energy

Hearing Of The House Science And Technology Committee - New Directions For Energy Research And Development At The U.S. Department Of Energy

Chaired By: Rep. Bart Gordon

Witness: Dr. Steven Chu, Secretary, Department Of Energy

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REP. GORDON: (In progress) -- Dr. Steven Chu here to testify on the new direction of the energy research at the Department of Energy. As a preview to the more detailed budget proposal, we will see from the administration in April, this hearing provides an opportunity for Secretary Chu to discuss the Administration's priorities for energy research and development. The Department has a critical task ahead in the energy and climate research and technology development.

And make no mistake. At this time gas prices may be low and the effects of climate change may not be apparent to everyone, but this will not last. We must take action now to become a cleaner, more efficient energy economy. To do this, we must diversify our sources of energy by expanding the use of renewable energy and by using fossil fuels more cleanly and efficiently. And I believe that nuclear energy will also be apart of this equation, but I have concerns about the magnitude -- or the management of waste.

And Dr. Chu, this committee stands ready to work with you to develop the appropriate R&D path for that disposal concern. As a key member of the National Academy's (Gathering Storm ?) Panel, Dr. Chu was intimately involved in laying the groundwork for the Advanced Research Projects Agency for Energy, or ARPAE. And as you know, this passed by an overwhelming bipartisan support out of this committee. And this committee will continue to work with the secretary to ensure its success. I look forward to hearing about the status of the ARPAE startup.

The $39 billion allocated to DOE and the Recovery Act funds a wide range of activities spanning the innovation spectrum from basic research to supporting the market for new energy technologies. It also presents a historic opportunity to put people to work building a more sustainable future for the country. However, when it comes to taxpayer money, we must work together to ensure these funds are spent wisely. In this hearing, we will have only a few brief opportunities to cover a wide range of issues, but I consider this the beginning of a productive partnership with Secretary Chu.

And Dr. Chu, I look forward to your testimony, and I thank you for appearing before the committee this morning.

And now the chairman recognizes Mr. Hall for an opening statement.

REP. RALPH M. HALL (R-TX): Mr. Chairman, I do thank you for holding this hearing today, and I'll actually extend my welcome to Secretary Chu. It's good to have you here, and I look forward to working with you as we continue to tackle our energy challenges, and there are quite a few of them.

I'm pleased to see the level of commitment in the President's budget supporting research and development in the important fields of renewable energy and basic energy, as well -- I know renewable energy is going to be an important and necessary part of the energy portfolio as we go forward with the dual goals of energy independence and clean environment.

I'm also pleased that the President's budget contained a boost toward developing low carbon coal technologies. I've always been supportive of using this very abundant domestic resource for providing our country's energy needs. With widespread commercial use of carbon capture and sequestration technology, our country can hopefully have the option of replacing imports of oil and gas with coal to liquids fuels and methane gas from coal.

What I haven't seen or heard is what the plans are for oil and gas research and development going forward. I believe in all of the above, quote and unquote, answer to our energy problems, and that includes using domestic sources of oil and natural gas. Research and development in these fields does not benefit the major oil companies, but it does benefit the small, independent oil and gas producers who should be helped in their efforts to bring our domestic supplies to the market rather than penalize at every step.

I'm very disappointed that the President recommended that the Ultra Deepwater and unconventional natural gas and other petroleum research programs be repealed. The prior Administration made this recommendation, as well as Congress, and Congress has repeatedly said to the President and to the prior Administration you're wrong, and we funded this valuable program anyway.

I liked George Bush, and he -- I flew west with him to sign the bill that included this provision in it. And usually they turn and hand the pencil to someone. All they said was Ralph Hall's with me because he just wanted some coffee from Air Force One. What he didn't know was I had five of his cups in my briefcase at that time. (Laughter.)

But the Ultra Deep program is paid for by the federal lease, royalties, rents and bonuses paid by oil and gas companies, not taxpayers, and it'll make the government more money in the long run, as resulting research and development will lead to increased royalties, rents and bonuses paid by oil and gas companies.

And Mr. Chairman, in order to stress the importance of this issue, I would ask to include in this document highlights from (RIPSA ?), a project portfolio in the record.

REP. GORDON: Without objection, this will be made part of the record.

REP. HALL: Thank you. I'll hand it to him. And I'll have more to say about this during the question and answer, but I just want to urge the secretary and President Obama to reconsider their position on this program. I'm also interested in hearing about the Administration's decision to move away from the idea of storing spent nuclear fuel at the Yucca Mountain repository in Nevada and how that decision will or will not affect the current application for new plants in the future of nuclear energy in our country.

Nuclear energy is, of course, also part of the, quote, "all of the above," unquote, energy solution and should be considered a powerhouse in our energy arsenal. Out of all of the emissions-free options, it produces the most energy and is the most reliable. And I urge the secretary to make sure it remains apart of this mix.

And I look forward to working with you and look forward to your testimony and the ensuing discussion on the very important work that's being done by the Department of Energy.

The Department, I think, is probably the number one impartment to the future of this country and to this position that we're taking in trying to produce our own energy and not rely on nations that don't really trust us and that we could do without and keep those billions of dollars within the confines of the 50 states.

And with that, I yield back my time.

REP. GORDON: Thank you, Mr. Hall, and I certainly agree with you.

Dr. Chu, you'll find that our committee tries to work in collaboration. Most everything we get -- everything we got here is bipartisan, most often is unanimous. And so we hope to be an asset for you in that regard. If there are other members who wish to submit additional opening statements, your statements will be added to the record at this point.

Dr. Chu, we normally ask our witnesses to limit their testimony to five minutes, however, since you're the only person on the panel and the star of the show, we don't want to limit you. We're interested in hearing your plans and how you want to take the Department of Energy into the future. And so at this time please begin.

SEC. CHU: Okay, thank you. Chairman Gordon, Ranking Member Hall, members of the committee, thank you for the opportunity to appear before you today to talk about the new directions for energy research and development at the Department of Energy.

Today we import roughly 60 percent of our oil, draining resources from our economy and leaving it vulnerable to supply disruptions. Much of that oil is controlled by regimes that don't share our values, weakening our security. Additional, if we continue our current rates of greenhouse gas emissions, the consequences of our climate could be disastrous.

In the near term, President Obama and this Congress have already taken a key step towards meeting these challenges by passing the American Recovery and Reinvestment Act of 2009. This legislation will put Americans back to work while laying the groundwork for clean energy economy.

Getting this money into economic -- into the economy quickly, carefully, and transparently is a top priority for me. I know that your constituent states, cities and businesses area eager to move forward and are seeking more information on how to access this funding. I've met with many of them already, and we will have much more detail in the coming weeks.

With that brief introduction, I would like to turn to a topic that's near and dear to my heart. How can we better nurture and harness (science ?) to solve our energy and climate change problems? I've spent most of my career in research labs as a student, a researcher, faculty member. I took the challenge of being secretary of Energy in part for the chance to ensure the Department of Energy laboratories and our country's universities will generate ideas that will help us address our energy challenges.

I also strongly believe that the key to our prosperity in the 21st century lies in our ability to nurture our intellectual capital in science and engineering. Our previous investments in science led to the birth of the semiconductor computer and biotechnology industries that have added greatly to our economic prosperity. Now we need similar breakthroughs on energy.

We're already taking steps in the right direction, but we need to do more. First, we need to increase funding. As part of the President's plan to double federal investment in the basic sciences, the 2010 budget provides substantially increased support for the Office of Science, building on the $1.6 billion provided in the Recovery Act for the Department of Energy's basic sciences programs.

We also need to refocus our scarce research dollars. In April, a more detailed FY '10 budget will be transmitted to the Congress. This budget will improve energy research development and deployment at the DOE in several ways. First, we need to develop science and engineering talent. The FY 2010 budget supports graduate fellowship programs that will train students in energy related fields. I will also seek to build on the DOE's existing research strengths by attracting and retaining the most talented scientists.

The second area I want to discuss is the need to support transformational research. What do I mean by transformational technology? I mean technology that's game changing, as opposed to merely incremental. For example, in the 1920s and '30s when Bell Laboratories was focused on extending the life of vacuum tubes, another much smaller research program was started to investigate a completely new device based on a revolutionary new advance in the understanding of the microscopic world; quantum mechanics. The result of this transformational research was the transistor, which transformed communications, allowed the computer industry to blossom, and changed the world forever.

DOE must strive to be the modern version of the old Bell Laboratories in energy research. Because of the payoffs from research and transformational technologies are both higher risk and longer term, government investment is critical and appropriate. We're already finding this type of research in biofuels. As this committee knows, we have funded three bioenergy research centers; one at Oak Ridge National Laboratory, one led by the University of Wisconsin in Madison in collaboration with Michigan State University, and one led by Lawrence Berkeley National Laboratory. Each of these centers is targeting breakthroughs in biofuel technology development that will be needed to make abundant, affordable, low carbon biofuels a reality.

We need to do more transformational research in the DOE to bring a range of clean energy technologies to the point where the private sector can pick them up, including gasoline and diesel like biofuels generated from lumber waste, crop waste, solid waste, and non-food crops, automobile batteries with two or three times the energy density that can survive 15 years of deep discharges, photovoltaic solar energy that's five times cheaper than today's technology, computer design tools for commercial and residential buildings that will enable reductions in energy consumption of up to 80 percent with investments that will pay for themselves in less than ten years, and large-scale energy storage systems so that variable renewable energy sources -- resources, such as wind or solar power, can be become (base load ?) power generators.

This is not a definitive list of (hard status ?) technology goals, but it gives a sense of the type of technologies and benchmarks that I think we should be aiming for. We will need transformational research to obtain these types of goals. To make it happen, we will need to reenergize our national labs as centers of great science and innovation.

At the same time, we need to seek innovation wherever it can be found. The new Advanced Research Projects Agency Energy, or ARPA-E, will open up research funding to the best minds in the country wherever they will be. ARPA-E will identify technologies with potential to become the next generation of revolutionary energy systems and products while it will make a major impact on our twin problems of energy security and climate change.

I want to thank this committee for your leadership in championing the creation of ARPA-E. ARPA-E will accomplish its mission by funding high-risk, high payoff R&D performed by industry, academia, not for profits, national laboratories and consortia. ARPAE will bring the DARPA style of transformational R&D management to focus on energy problems and opportunities. I pledge to you that we will have this program up and running as soon as possible.

The third area I would like to discuss is that DOE needs to foster better research collaboration, both internally and externally. We will better integrate national lab university and industry research, and we will seek partnerships with other nations. For example, increased international cooperation on carbon capture and storage technology could reduce both the cost and time of developing the range of pre and post combustion technologies that are needed to meet the climate challenge.

Finally, while we work on transformational technologies, DOE must improve its efforts to demonstrate next generation technologies and to deploy demonstrated clean energy technologies at scale. The loan guarantee program will be critical to these efforts by helping to commercialize technologies and the Recovery Act funding for weatherization and energy efficiency block grant programs will accelerate the deployment of energy efficient technologies.

So I'm excited about the prospect of improving DOE's clean energy research, development and deployment efforts. I thank you, and I'd be glad to answer your questions at this time.

REP. GORDON: Thank you, Dr. Chu, and exciting is the right term. You have an exciting portfolio, an important portfolio for our country, and we wish you the very best of luck.

As you know, I am -- well, first of all, at this time we begin questions, and I recognize myself for five minutes.

As you know, I am eager to see ARPAE established, and I appreciate your comments. In your comment you said that you wanted to see it -- or it would be up and running as soon as possible, and I don't doubt your commitment, but could you give us a little bit of an idea of what -- some kind of rough timeline you see on getting ARPAE up and running, and have you assigned a team to serve as any kind of a start-up staff, and do you envision ARPAE coordinating -- or how do you envision ARPAE coordinating its R&D with other programs in the national labs?

SEC. CHU: Right, so I've met with -- there was a team of people that were trying to see what the structure should be like. I think it's very consistent with this committee's views. I did ask specifically how long it would take. I didn't like the answer. (Laughs.) The answer was, quite frankly -- the first pass answer was one year, and so I instruct them -- go back and -- I want to see exactly the timeline of why it would take so long. There might be regulations, things like that. And I have not gotten back the answer to that. So I hope it would take much shorter than one year.

REP. GORDON: Well, as I think mentioned to you earlier, I know that DARPA has some programs that are available to pass off if you think that those are appropriate. You also received $400 million in the recovery package. You know, how long is that going to last, and how -- you know, what are your thoughts on spending those dollars? How much will that be used towards start-up versus actual -- implementing the program?

SEC. CHU: Well, we first were already looking around for the head of the ARPAE program. I would hope -- again, I was a little dismayed by this first pass at why it would take so long, and -- but I think we are going to do things simultaneously. We're discussing drafting a request for proposals, so even as we search for director and the key personnel -- and so because it is part of the economic recovery, I -- you know, we want to start actually funding projects -- hopefully significantly less than one year.

REP. GORDON: Well, I think double or tripling tracking is the appropriate way to go. I mean, there's no -- you know, so often around here we have to get through one thing, and then the next thing and the next thing. You know, they can be those parallel tracks.

There's draft legislation in the Senate that includes a provision to ensure that all ARPAE project teams will be industry led. Do you feel this is an appropriate direction to give ARPAE, or should it have more flexibility?

SEC. CHU: I would like it to have more flexibility. Certainly, having it all industry led may not be (appropriate ?), just as the old ARPA program -- it funded universities. It funded other research. It funded industries. It funded start-up companies. It funded established companies. And really, I would like to throw the door open to any and all and just pick the best ideas.

REP. GORDON: I would agree. I think flexibility is the key to ARPA-E's success, and you take whatever model is best for the particular situation that's before you. And do you have any thoughts as to a timeframe on ARPAE, when it needs to be reviewed by the national academies?

SEC. CHU: Actually, when it gets reviewed -- my -- sir, the best way to -- in my opinion, the best (way ?) when you're starting something is to look at it very, very early just in case you feel it's getting off the tracks. But a national academy review has certain time constraints, and so they would -- I would probably have an internal review maybe with -- working with this committee and others in Congress within a year to actually see what's going on, because if it is -- long-term things can be avoided if you catch things early. And so within a year of the start -- first six months you look at the tranche proposals that have been (recommended ?). Are these good choices? Are the people in place good people who are making the right decisions?

And remember that this is -- the idea of this new funding mechanism is that it is a very small, very select group of people that are unconstrained by the usual things. So they can really make the best decisions. And to focus on those three-year time scales -- it's not stewardship. It's we'll give you money for a very short period of time. After maybe five years, that's it.


SEC. CHU: Get it done. And after three to five years you better get some other sponsor. You know, industry better pick it up or something. And that actually -- nothing focuses the mind like a you know what -- (laughter) -- the termination of funding. (Laughs.)

REP. GORDON: That's true. Well, you get it, and I'm glad that we've got you there. In your testimony you say my goal is nothing less than to build research networks within the Department, across the government, throughout the nation, and around the globe. This is something that I have an interest in in the sense that so many of our major research projects -- carbon tax or sequestration, things of this nature -- are going to be so expensive. And I think that we live in a world where it's -- you know, it's (sort of ?) them that's got it and them that don't, and we are in the don't category to a great extent.

And so I think it benefits us to collaborate with other nations, both intellectually as well as financially. And so do you -- I know -- and I think G-8 awhile back had a resolution concerning CCS. Can you give us some of your thoughts in terms of what are those best areas of opportunity for international cooperation? And I'd like to better understand what that vehicle would be. You know, money is going to be involved, and it seems to me that you're going to have to have a head of state to head of state agreement and a commitment to provide the funds. But then there's also going to have to be some type of a -- you know, of an international protocol that's going to be set up. Are there -- a treaty or whatever.

You know, what are your thoughts? Do we go -- each one will be different, or is there a form for them all?

SEC. CHU: Okay, so if this starts on the basic premise that -- when you build a coal power plant, most of that money is in infrastructure. You don't order a coal power plant, put it on a boat and ship it, just like -- similar with a building, so when -- first, let me back off and say that we don't actually know today what the best technology will be. There are a couple of approaches, both pre- combustion and post-combustion capture.

One thing is for sure, that we have to develop some post- combustion capture because 99 point something percent of all the coal plants are pulverized coal, conventional coal plants. Before this -- it will take some time to prove the technology, say, roughly ten years. In the meantime, we'll be -- still building -- the world will still be building lots of conventional coal plants. So even if we develop a pre-combustion strategy going forward, there's all those investments in the post-combustion that we have to make.

So there are several strategies that countries are looking at. I have been talking with all of the (equivalent ?) -- the energy ministers in various countries. When I say that -- how can we share what we know, I mean -- a really intimate way so that their engineers and people who are operating the -- (inaudible) -- that are actually there in these pilot programs. It's the lessons learned and actually running the thing that's very important. That's the technical know- how.

Because you can't -- the IP issue, in my mind, is less important because most of this construction will be in the home country, like a building. So I think if we have the engineers and the people who are actually there learning the actual real life experiences as we operate these pilot plans -- so if Great Britain wants to build one, or China wants to build one, and Denmark wants to build one, we build one, we say, okay, this is the menu of things we need to explore.

If country X does one, we do another one. And, oh, by the way, you -- we will have you send over your people, so you're there with us and learning the lessons in real time. And similarly, the United States can be over there.

It would be harder to craft an agreement where money goes overseas, especially in this -- economic times, because that money -- the billions of dollars, for example, the United States wants to spend on these pilot programs -- it would be better spent in this country because it's part of the economic recovery, and similarly in all the other countries. But sharing the technical knowledge is something very different. And so you build up a common pool of knowledge mostly by being on site and sharing those (lessons ?).

When I talk about that, so far I've gotten a very good reception. Now, how do you get this crafted into a working agreement -- is really the issue. But right now -- now's the time because many countries -- Europe is talking about ten to 12 carbon sequestration power experiments or pre-commercial plants. We're talking about several here in the United States. I know China's talking of at least one. And within a year or so it will be decided what's going to be done, so this is the time to actually get those --

REP. GORDON: Do you need anymore tools to arrange these agreements?

SEC. CHU: Well, it's mostly -- it's -- as you say, it's probably a State Department issue, but it's partly a energy issue. We'll find out as soon as -- I was just meeting with a -- the representative from China, NDRC, NRDC, NDRC, one of those two, and I was really interested in finding out -- we will know what we need as soon as we actually start to craft an agreement, an actual agreement.

REP. GORDON: I don't want to take up too much time. Can you give me real quickly two or three other prime areas for international cooperation in energy?

SEC. CHU: Buildings, the same reason. If you get together and try to design, for example, software tools to help architects and structural engineers design energy efficient buildings, this is actually pretty sophisticated stuff. We don't understand how to design energy efficient buildings. And the reason I know -- I can say this is when we tried to build a more energy efficient building, let's say reducing the energy by 50 percent, 80 percent, typically we fall short of the design goal. The actual performance is less than the design. And if you look at a scatter plot of -- the more aggressively we try to design an energy efficient building, the less efficient it becomes.

REP. GORDON: We're going to have to go into -- could you just give me the technologies? (It's very interesting, but I don't want -- ?)

SEC. CHU: Building efficiency -- software design tools, okay?

REP. GORDON: Okay, any other areas of international cooperation you think would be beneficial?

SEC. CHU: I think in some of the other things -- certainly software design tools for building efficiency, automobile efficiency. But then it gets -- (it quickly ?) -- there's some issues, quite frankly, that -- getting into IP and other issues.

REP. GORDON: (Inaudible.)

SEC. CHU: And so I'm looking at those things which are -- the investments will made in that country, like buildings, like power plants where I don't see as much of a barrier.

REP. GORDON: Okay. Thank you.

And Mr. Hall, thank you for patience there, and you're recognized.

REP. HALL: I'm always patient with the chairman. And I join the chairman in lauding your appointment, not just Democrats, but some Republicans, knowing your history and your background, your ability to serve. We're pleased with your confirmation, and I think you know that.

And I also have not been able to give our leader the assistance that he would like for me to have given him on ARPA-E, but it's the law of the land now, and I hope that it's going to be as beneficial as Chairman Gordon -- and his leadership over its passage, and I certainly support working it out for the greatest good for the greatest number, which is our goal always in that which we do here.

Mr. Secretary, let me just go right into what I'm disappointed it though. I'm disappointed to see that the President's FY 2010 budget proposes to terminate the Ultra Deepwater and Unconventional Natural Gas and Other Petroleum Resources Research Program, and I know you're familiar with that. It's been passed many times. It's been voted on several times by the House and Senate, and it's working.

At first blush the proposed termination appears to be part of an across the board effort to reduce or eliminate federal incentives for the domestic oil and gas industry and to belittle the importance, belittle the necessity of fossil fuels. And I strongly disagree with this policy. Every incremental BTU of domestic natural gas is as important as every additional kilowatt hour of solar energy in terms of reducing our dependence on oil imports. Currently, 33 percent of domestic natural gas production is from coal bed methane in tight formations, such as shale, all of which is the outgrowth of DOE funded R&D in this area.

However, rather than simply talk about the energy security aspects on this issue, I'd like to focus on the scientific aspects of the Ultra Deepwater and unconventional research and ask you several specific questions in that regard, sir. First, I understand that the Administration's rationale is that this research benefits the large domestic oil and natural gas producers in that they can otherwise pay for this research. And that's why President Bush changed his mind about it in the last part of his service and made efforts to repeal it, which, once again, the House and the Congress rejected and supported this program.

I'm very sincere with you on that, and I really want to talk with you later on it. I spent a lot of time with the previous secretary of Energy, and he was operating under a situation where the President was really for it in the last analysis, but he remained true to the oath he took and worked well with us, though I respected his support of the person that appointed him, as I do you.

The University of Tulsa -- though these are things that I want to point out. The University of Tulsa received $440,000 for a 36- month project of optimization of (NFALE ?) well locations in Wamsutter fields to increase production in existing wells. And Texas A&M University received $444,969 for a 24-month project to field (tasks ?) -- low impact oil field access roads to reduce environmental footprints in desert areas. Three, the Colorado School of Mines received $860,000 for a 24-month program to investigate biochemical factors to enhance the generation of methane from coal to produce cleaner methane.

And I could go on and on, but I think you get my point. These are not the major oil companies. They're national labs and research institutions that are benefiting and are serving and are partnering with this and energy efforts. It's as much a scientific thrust as it is an energy thrust. And all of these cases of existing research projects appear to me to represent cutting edge, high-risk science led by university research teams. And I'm aware that each of these projects include significant cost share provided by industry.

Mr. Secretary, do you believe that the oil and gas industry left to its own devices would fund these types of research projects? I don't think so. Would you not agree that the character of these research projects is similar to the type of research projects funded by DOE Office of Science?

SEC. CHU: Well, actually, the type of research you just described -- for example, improving our ability to recover oil from reservoirs. We typically only get about 30 percent, even in -- with advance in enhanced oil recovery methods. We typically get 30, maybe at most 40 percent of the oil in the ground. The rest of it is -- with today's technology unrecoverable.

And so I think it is appropriate for the Department of Energy to be funding things like that. The, you know, injection of CO2 for enhanced oil recovery is something that has been proven to be commercially viable.

There are other opportunities of injecting, for example, microbes deep in the strata, which will have a -- which -- and liberate some of the oil and allow it to be pumped out. Those things -- I actually think it's appropriate the Department of Energy fund.

REP. HALL: And I appreciate the fact that -- I believe you will discuss it with us --

SEC. CHU: Yes.

REP. HALL: -- and that we can talk to you about it. If we could talk to the former secretary, as he was loyal to a President that objected and was on the other side -- I was not accustomed to being on the other side of George Bush, but on this situation I surely was not there.

Second, are you aware that there are currently 92 applications for universities, national labs, state agencies and private R&D technology development companies totaling 105 million that have been peer reviewed and are awaiting action? I'm told that these projects are immediately ready to proceed and would immediately employ researchers and supporting personnel. Should this not qualify for use of some of the stimulus funds?

SEC. CHU: Well, actually, I'm not aware of the details of the proposals that -- and I certainly will look into it.

REP. HALL: But you're open to --

SEC. CHU: Yes.

REP. HALL: -- submit them to you.

And finally, Mr. Secretary, I'd like to ask you if you'll have -- if you have personally reviewed the quality of research supported by this program. If not, could you provide me with your assurance that you will personally look into this and give me your assessment prior to taking any further actions in the funding issue? I greatly respect your scientific credentials and would welcome your personal review.

SEC. CHU: I'm not --

REP. HALL: I'm not alone in this because --

SEC. CHU: Right.

REP. HALL: -- up and down this row we voted for this program more than once, and we think that we're getting the energy from this program that we wouldn't get if we didn't have this energy, and it's being paid for by the energy we do get, so it's no cost to the taxpayers actually.

SEC. CHU: I --

REP. HALL: And I want to talk to you about it.

SEC. CHU: Okay, I've been looking forward to talking to you about it. I actually didn't know -- I'll confess that the Deepwater (ocean ?) recovery was actually supporting these other things of enhanced oil recovery on land.

REP. HALL: Yeah.

SEC. CHU: So I would be looking forward to talking to you. I --

REP. HALL: And I thank you, and I thank the chair for letting me go over a little bit.

REP. GORDON: Mr. Wu, you're recognized for five minutes.

REP. DAVID WU (D-OR): Thank you, Mr. Chairman.

Welcome, Mr. Secretary. You've blown into town like a breath of fresh air. I love your talk about transformational technologies. For the moment I'd like to invite you to talk a little bit about more mundane things, like standards and interoperability and metrics with respect to two areas. One is proposed cap and trade legislation, and the other is for the proposed Smart Grid.

With respect to cap and trade legislation, as you see it, are there remaining metrics or measurement issues, both with respect to measuring for the cap and quantifying and measuring for the trading units, and can the National Institute of Standards and Technology or other measurement groups be helpful in the creation of both the legislation and the regulatory formats to follow?

SEC. CHU: I think in terms of the measurements, I'm not deeply connected to how -- (inaudible) -- evaluates things. You're talking about, for example, overall lifecycle emissions for a cement industry or steel, or --

REP. WU: Whether one views it as lifecycle, or --

SEC. CHU: (Inaudible.)

REP. WU: -- even just measuring --

SEC. CHU: Right.

REP. WU: -- at one moment in time --

SEC. CHU: Right.

REP. WU: -- and accurately doing so are two different problems.

SEC. CHU: Right. And so the measurement itself -- it does become important if an estimate of how much carbon is being emitted would influence how much one -- how many -- how much allowances one would have. I did not know that this was that controversial. There are varying -- I do know there are varying degrees in an industry, let's say in a cement industry, varying degrees of how efficient some plants are. But I didn't realize that -- you know, you look at plant X, or a coal burning plant, and, (you know, I ?) -- you see these ratings. The most efficient coal burning plants are, say, 42 percent efficient. The least efficient are actually in the mid-low 20s.

I was expecting that the estimates of how much emissions these plants were making for amount of energy produced was not that controversial. If it is, that would be an issue. I would certainly look into that. That's the sense I'm getting from your question.

REP. WU: Yes, I'm trying to get my arms around it, and I was hoping that you knew more than I did. And it looks like we both have some research to do in this field.

SEC. CHU: Right. Give me some time. And to see how controversial the estimates would be is specifically the -- I think the question I'm hearing.

REP. WU: Yes, and lifecycle estimates are another --

SEC. CHU: Right.

REP. WU: Right. And with respect to Smart Grid, in a prior energy bill we put in some language on interoperability. And I wanted to get your take on the current status of two different issues. One is interoperability, different components of a Smart Grid, and the other is the issue of open source versus proprietary software to operate (significant ?) parts of --

REP. WU: Yeah.

DR. CHU.: -- the Smart Grid.

REP. WU: This is something I did look into almost -- within the first few weeks. I've only been here a couple weeks anyways. (Laughs.) So I guess everything I've looked into is in the first couple weeks. But in any case, yes, I think in the 2005 Energy Act that was -- (inaudible) -- DOE incorporation with NIST -- get some standards. And I have to say that I've been somewhat disappointed. They're just beginning to sort of arrange the seating chart around the negotiating table, to put it, you know, in foreign diplomacy language. So we've held a couple of meetings with people from NIST to say this has to be fast tracked because this has been going on for almost two years.

You know, the issue is essentially that -- first, I'm in favor of open standards. I'm very much in favor of industry actually coming together and agreeing on an open standard. And so I am pushing very hard -- that this thing really get moving. I've talked to several people. Even before I came in -- becoming secretary of Energy, I've talked to people from many of the companies I've seen (in ABB ?). I talked to the CEO of General Electric very recently. Every time I talked to -- say we're all in favor of this, and I said but let's stop jockeying for a slight commercial advantage. It's too important, which is what standards negotiation is all about.

And so what we're doing -- the plan now is -- also FERC was in on this -- is the distribution centers. These are the really big dollar stuff, you know, the digital relays, the transform thing, that have to have a communication standard system. Those standards have to be developed first. Commercial -- you know, consumer stuff is the last thing, so at least we say we've got to get what we want in the standards, and we have to get it very quickly.

It's been a week or two since that meeting. I haven't gotten feedback. That's the other thing I found out, is, you know, you typically have to get a next meeting with deliverables for that meeting in order to actually make sure it goes forward. But this is on the -- very much on my radar screen.

SEC. CHU: Well, I wrote a part of that language, referring to he 2005 legislation. I wrote part of that language at 40,000 feet. So I attached to it, and if I can help you get some results on that from NIST or other agencies -- very much like to work with you on that.

REP. WU: Yeah, I think in -- as we develop these pilot experiments and Smart Grids -- unless you have the communication standards in place, people are very afraid to make millions and tens of millions and perhaps even hundreds of millions of dollars investment, or -- because of the retrofit. So the standards thing very early is something that's very important. You know, I've actually raised it with the President, and he's actually said he'd be willing to go into a meeting and say -- you know, I said we should lock them up in the room and say don't come out until you have a standard. (Laughs.)

REP. GORDON: Thank you, Mr. Wu.

Secretary Chu, I've told you earlier on that four years goes very quickly, and you're seeing the rope-a-dope that can make it go that way. So you've absolutely got the right idea. It takes that leadership. You've got to push it down to make it work.

Mr. Bartlett -- (inaudible) -- is recognized.

REP. ROSCOE G. BARTLETT (R-MD): Thank you very much. Welcome aboard, sir.

To the extent that we've not been as aggressive as we might have in finding new oil fields, to the extent that we've not done what we might well have done in enhanced oil recovery, I'm encouraged, because that means there's going to be a little bit more oil for my ten kids, my 16 grandkids, and my two great grandkids.

We've been relating ourself to oil as if it were infinite, that there would be no end to it. That, of course, is not true. There is such a thing as peak oil that was predicted by M. King Hubbert in 1956 for our country. Right on schedule, it occurred in 1970. And although we've drilled more oil wells than all the rest of the world put together, we cannot make M. King Hubbert a liar.

A couple of years ago I led a codel to China, and we were talking about energy. And they began their discussion of energy by noting post oil. There will be a post oil world, of course. We think in terms of the next election, which for us in Congress is never more than -- never less than two years away. And in the business world they kind of think in terms of the next quarter report. If they can't make that look good, why, the stockholders are going to be angry at them. In that part of the world they tend to think in terms of generations and centuries. Of course, there will be a post oil world.

Hyman Rickover gave a great speech, I think probably the most insightful speech of the last century. It was given 52 years ago, the 14th day of this May to a group of physicians in St. Paul, Minnesota. And in that speech he noted that the age of oil would be but a blip in the history of man, the 8,000 -- as he said, the 8,000-year recorded history of man. He had no idea then how long the age of oil would last, but he said how long it lasted was important in only regard; the longer it lasted, the more time would we have to plan an orderly transition to other energy sources. Of course, we have not been doing that. We have been behaving as if oil is forever.

I'm concerned, sir, about the lack of urgency in our country, and indeed, around the world. Business as usual will not suffice. China is buying up oil all over the world. In today's world it makes no difference who owns the oil. The person who comes with the dollars buys the oil. Why, sir, do you think China is buying up oil all over the world, and what do you think our response ought to be that?

SEC. CHU: China has been following somewhat America's economic development. It's buying oil because as its economy grows, it needs more oil. It --

REP. BARTLETT: But, sir, today you don't need to own the oil to have the oil. You simply come with the dollars --

SEC. CHU: Right.

REP. BARTLETT: -- and you buy the oil. Why are they buying the oil?

SEC. CHU: Are you saying why -- well, they're establishing -- my understanding is they're establishing relationships with countries, as did the United States and does the United States, in terms of the oil suppliers, but it -- but I agree with you. Oil is a commodity. It's on the market, and you can buy from one supplier or another supplier, but --

REP. BARTLETT: At the same time, though, buying up this oil all over the world -- they are very aggressively building a blue water navy. Can you imagine, sir, that the day may come when the Chinese tell us I'm sorry, guys, but we own the oil and we have billion -- 300 million people and 900 million of them live in rural areas, and through the miracle of communications they know the benefits of an industrialized society and they're demanding it? And we are not going to share our oil with you. To make that a reality, wouldn't they have to have a big blue water navy?

SEC. CHU: Well, I think this is -- goes to a larger question of why the United States should work very hard for energy independence and oil independence. And there's two ways of doing this. One is to develop sources at home. One is to develop alternative sources, for example, biofuels, which I personally believe, if we do the science correctly, can be a huge addition to liquid transportation fuel.

Another thing is use less oil by making more efficient cars, personal vehicles, electric vehicles so we can offload and transfer the personal transportation needs to electricity, which then -- there's a wider palate of options available. So the thing the United States can do best instead of jockeying for positions is to actually decrease our importation of oil in a significant way by all the above mentioned things. And so that's the best thing we can do, and this is something we should do.

REP. BARTLETT: Thank you, sir, and thank you, Mr. Chairman.

REP. GORDON: Thank you, and Dr. Baird is recognized for five minutes.

REP. BRIAN BAIRD (D-WA): Thank you, Mr. Chairman. Thank you, Mr. Secretary. I am going to be very quick with five questions. Then you can answer them in your -- the time available. First, I'd invite you to speak briefly about the constraint on the administrative costs on DOE that were imposed on the stimulus and how that will affect you. Second, could you talk a little bit about CO2's impact on the oceans, particularly acidification? Third, your views on behavior change and conservation as a quick response to our -- both our energy and our climate over heating. Fourth, the role of forest products in renewable energies. And finally, if you have time left, a little bit about the national labs. Thank you.

SEC. CHU: Okay, so the first is a technical issue. Thank you for the questions.

In the Economic Recovery Act there's a -- in order to, for example, administer the loans and to make sure that that money is wisely invested and to have proper oversight, you need additional administrative costs. And the other agencies -- they were given one percent of the total to administer those costs. This is an example. For some reason not clear to me the Department of Energy was giving half a percent.

So as important as energy is, we've said -- we've sort of shortened -- shorted you. We've said you only get half of what the other agencies get --

SEC. CHU: Right.

REP. BAIRD: -- to administer the loans, for example, and the things that we need to do to make sure that the money is given out wisely, that there's proper oversight, things of that nature. And so that's worrisome.

SEC. CHU: I would hope we can try to address that, and we'll do what we can to help.

REP. BAIRD: Okay, in terms of the CO2 impact, there are many impacts. I share your concern that perhaps the oceans are not mentioned enough. What happens is as the CO2 in the atmosphere increases, more carbon dioxide is absorbed in the oceans. It becomes more acidic. Today, the oceans are about 30 percent more acidic than they were in pre-industrial revolution times. That's significant.

And when the ocean becomes more acidic, several things are known to happen. Coral is threatened. The little critters that -- when you go snorkeling hit your snorkel mask. They have calcium carbonate shells. Those organisms actually -- when the PH gets too low, near PH 7, what's going to happen is that they will lose their ability to capture the carbon and put it in their shells, and that actually -- construct the shells. So lab experiments where they just deliberately make it more acidic -- they find that they lose their ability.

When that happens, the whole food chain in the ocean is at risk. Now, that's not going to happen any time soon, but these are some of the issues that one is concerned about. In terms of behavior change, it's -- this is something that if you look in the history of how you get -- (inaudible) -- to respond very quickly -- it -- we should be paying more attention to this. If you consider what happened in World War II, there were posters saying that we should save energy, especially transportation fuel because any drop we saved in energy and transportation fuel could be used in our wartime effort. And there was a great deal of input, and Americans rose to the challenge, and they -- it became the patriotic duty to save energy.

Now we have a similar situation. If you save energy, for example, by getting more fuel efficient cars, you decrease the demand. That will keep the prices down. There's a lot less carbon in the atmosphere, and we are less depending on foreign oil. And so I think it's a three-fer, if you will, in terms not only patriotic duty to our country, but actually, to the world. And I think to get this notion that it's good in many, many ways, to think about decreasing your consumption of energy, whether it be turning off light bulbs or your computers after you're done, or buying a more fuel efficient car when that opportunity arises. These are all things that we need to do.

The (United States ?) is convinced -- a younger generation -- that it is not cool to smoke cigarettes. And that has changed behavior. And I think we should convince the younger generation and the older generation that it's actually cool to save energy and to become much more energy efficient. This is something that the world really needs. So this change of behavior is something America has been able to do in the past, and we know -- we have the tools. I think it -- we should -- I'm all for talking more about that.

In terms of -- you mentioned forest products. This goes to the question of biofuels. You know, already these biofuel programs in our national labs have already altered yeast and bacteria so that the yeast and bacteria -- (inaudible) -- simple sugars can produce not just ethanol, but gasoline like fuel and diesel like fuel and jet plane like fuel. And so now they're working on increasing productivity to make it economically viable.

The good thing about the feedstock is they want to use all of the lumber wastes, the agriculture waste that include wheat straw, rice straw. Half the corn stover can be used. The other half has to be plowed back into the fields, but half the corn stover can be used. All of the agricultural waste that we either burn or we let rot that ends up in the microbes -- turn that into carbon dioxide and methane. We should be turning -- converting that to either -- helping -- coal burning it in coal burning plants, or better still, converting this into transportation fuel, again, to help break our oil dependency.

This is something that the national labs, the Department of Energy is working very hard in doing, because this is -- this could be a significant -- this could be half our non-diesel jet plane transportation fuel. And finally, the national lab systems --

REP. GORDON: Dr. Chu -- (inaudible) -- get to the national labs later, if that's okay.

REP. BAIRD: Okay, okay.

REP. GORDON: I'm sure that'll be of interest --

REP. BAIRD: All right.

REP. GORDON: -- to other folks too.

Ms. Biggert is recognized.

REP. JUDY BIGGERT (R-IL): Thank you, Mr. Chairman, and welcome, Mr. Secretary. You and I have had a brief conversation earlier on nuclear energy. I'd like to get to that. But just before I do that I'd -- going back to a question that Chairman Gordon asked you, and that was about the technology transfer on an international basis. Session 1,001 in the EPACT Bill of '05 addressed that issue of having a new technology transfer coordinator and working group appointed to work with the -- have a basis of working with the developing countries to deploy clean and efficient energy technologies and then lifted the barriers and the concerns. I don't know if you've worked with that, or have a coordinator in place.

SEC. CHU: No, I don't have a coordinator yet.

REP. BIGGERT: Okay. Well, I refer you to this bill. It's Public Law 10958 also. But you and I have discussed very briefly nuclear energy and reprocessing, and I was concerned to hear that you've moved beyond the repository of Yucca Mountain, and I'm -- the decision of the Administration, and I really am concerned about that. So where does that leave the Department of Energy in regards to reprocessing the next generation of nuclear plants?

SEC. CHU: Well, first, let me start by saying that I do firmly believe that nuclear energy has to be part of our energy supply in this century for sure because it is carbon-free. And so in terms of the waste, what the NRC had said is that if you store the waste in dry cast storage at the current sites, it is safe for decades from leakage into the environment. So that means we have time to develop a much more comprehensive plan.

I am working -- I know the Senate has already begun to talk about this -- of -- and we have independently -- but we'd like to work with Congress in this -- to put together a very blue ribbon panel of very -- of experts, of technical experts and wise people who can help us devise recommendations for a plan that actually -- a comprehensive plan and a fresh look at how we can store nuclear waste and eventually dispose of it.

The whole Yucca Mountain issue is -- the landscape has changed over the 20, 25 years when this first started. The conditions for -- first it was -- (started as ?) 10,000 years, and it had to be retrievable. Then Appeals Court -- (inaudible) -- said no. If science says it could -- the leak out rate could extend to a million years, then so be it. Then it should be a million years and yet still be retrievable.

That's a tough -- so the conditions changed, and so I would like a committee to say, okay, let's look at -- fresh look at the things, and what's our best strategy for moving forward in nuclear power?

REP. BIGGERT: But President Carter shut this down, what, 25, 30 years ago, and that really has set the U.S. back on nuclear energy and -- but over the past 30 years our national labs have been conducting research on Yucca Mountain, and your laboratory was part of that, many of the scientists. And it really has -- some of our -- you know, hundreds of our best scientists and engineers have been working on this, and it just seems like this is such a setback, and this resource -- research has been incorporated into the Yucca Mountain license application, which is now before the NRC.

It just seems like we've -- we're just going back to page one again and starting over, and I think that if we are ever going to end our dependence on foreign oil that nuclear has to be in the long-term the one that will take us over the top and really solve that problem. I don't know if you received the comprehensive briefings on the deficiencies of Yucca Mountain science and by whom, by I'm -- I really am concerned about this, and I think that we really are -- you know, have a lot of permits out there for new type of reactors. And if we don't move now, I don't know when this is going to happen. This is a real setback.

SEC. CHU: Well, I do share your feeling that we do not want to start the restart in -- I want to se the restarting of the of the nuclear industry in the United States, so, you know, the goal that you and I both share -- the other thing is that I fully intend to fund research in developing recycling methods that are proliferation resistant. That's -- (inaudible) --

REP. BIGGERT: But I think that's already happened, and I know Argonne has worked on that, and I (know ?) -- and there's --

SEC. CHU: Right.

REP. BIGGERT: -- you know, there's been a lot of research on that already. And there are some demonstration projects and were really ready to go to two years ago.

SEC. CHU: Well, okay, so my understanding of that -- certainly Argonne and people in Idaho have been looking at modifying the original PUREX process, which is --


SEC. CHU: -- the process that -- (inaudible) --


SEC. CHU: And now it's a (UREX ?) process, but it -- but those people who have developed those are like -- (still think ?) -- feel that it's not ready for -- it's not ready for piloting, that there are still issues that are --

REP. BIGGERT: Who are those people?

SEC. CHU: Those people are people like Phillip Fink. He used to be at Argonne. He's now in charge of that program in Idaho. I think he's very, very knowledgeable. Those are people who I do have a lot of trust in, and they are saying that we need to do more research before we -- (inaudible) -- pilot plans.

REP. GORDON: Thank you, and Ms. Giffords is recognized for five minutes.

REP. GIFFORDS: Thank you, Mr. Chairman, and thank you, Mr. Secretary, for coming before our committee today. It's no big surprise for members here that I'm very passionate about my home state of Arizona and solar energy.

When you think about over three hundred days of sunshine that Arizona has and other western states and, frankly, the whole country, really, I mean, comparing where we are with other countries, specifically, Germany, Japan, of course, Spain, I believe the United States is missing an incredible opportunity, so I was really delighted to hear your comments earlier about your emphasis for DOE to start pushing for, I think, five times cheaper technology for photovoltaic.

But I'd like to specifically ask you about the actions for DOE under your leadership in terms of engaging with a private sector for solar. Could you be a little bit more specific?

SEC. CHU: Well, it depends, see, normally, what has happened in the past is the Department of Energy will do some science, investments and science and get some patents and license the patents. I would want to go forward in an era where we begin to work with companies in a much more intimate way to get -- sort of before -- while the work is being done, I think companies do bring a lot of experiences in the sense that they are more attuned to manufacture ability issues than anyone in a laboratory.

And so, one of the things I have heard in the past is that, now, it's still come about in the Bay area and there are a lot of photovoltaic companies there. When I hear things like, well, the research direction in a particular laboratory has stopped paying attention because, in an effort to achieve a world record of incrementally better efficiency, they've gone away from manufactured ability. And I'm thinking to myself, "This is not good." And so, I think that it's ultimately going to be the cost of the manufactured ability and -- you pick a number -- whether it's 22 percent per silicon versus 22.5 percent or, for the very advanced one, multi- colored ones have gone from 39-to-40 percent, it's not as important as getting the costs down.

And so, that's one of the things I would really, really love to have is that the companies who have to deal with the manufacture ability issues are actually there side-by-side with the scientists in the national labs and universities.

REP. GIFFORDS: At last, you go to the area, it's like everyone's got a business card, a solar energy business card, you know, it's an incredible melting pot for a lot of that technology. My concern, not just from the patent side, but I don't see enough demonstration projects actually taking place. There is a lot of R&D going on, a lot of money in that area, but in terms of actually rolling the projects out, I don't see enough of it.

SEC. CHU: Well, I think the loan guarantee will help some of that. I think renewable portfolio standards which create a draw of the market will also help some of that. But solar thermal, for example, large scale solar thermal, right now, is less expensive than photovoltaic and there are some projects that are being considered; in California, I know of at least one that I think should be given a chance. These are a couple hundred megawatt projects, very significant projects, which also have some energy storage as well because it can store the heat. Those things should be demonstrated and I think loan guarantees and things like that will help.

REP. GIFFORDS: One of the areas I think we can get our biggest bang for the buck is with our United States military. I had a chance to visit Nellis Air Force Base last year and this is an incredible, great success story in terms of a public/private partnership. When you look at the DOD, 80 percent of all of the Federal government's energy is used by the DOD and I believe that military basis provide the best ability, you know, in a very quick way unlike a lot of other areas of our Federal government, to put projects, install projects, get them going.

I'm just curious about DOE's ability to partner with the DOD and put some of these demonstration projects, if you're working on that, and if it's on your radar screen?

SEC. CHU: It is now, but it certainly is true that the Department of Defense does -- they have a lot of land as well, and so, they actually have the ability to test a lot of things in solar energy, as one example. I will look into it.

REP. GIFFORDS: I'm looking forward to working with you, Mr. Secretary. Thank you, Mr. Chairman.

REP. GORDON: Mr. Bilbray?

REP. BILBRAY: Thank you, Mr. Chairman. As I just sort of just listened to the conversation, I probably have one of the most environmentally sensitive parts of California, the coastal area or north San Diego.

In fact, one of my communities probably pride themselves on environmental sensitivity and was pushing renewables way back in the '80s. It happened to be the first city that outlawed wind generators within their jurisdiction, too.

One of the biggest concerns I've had coming from local government was how much government is standing in the way?

Let me first say, as a former member of the Air Resources Board in California and knowing your record, I was really excited to hear that the Administration was looking to you to take this position and I really feel good about it. And I really feel good about it for one reason. You were somebody, along with your other directors of the Department of Energy, to stand up and be willing to say what needed to be said and not worry about the political repercussions. I think that says a lot about the Administration that they were willing to choose somebody who had said something that might not have been politically correct at the time, but was scientifically essential to be said.

And your position in August along with the other secretaries on the absolute essential part that nuclear power is going to play in climate change issues show that you were brave enough to say that. I think more people like yourself standing up will send the signal to everybody that, you know, those who were so prejudice against this clean form of energy need to rethink their prejudice.

At this time, with what you know, would you agree that the disposal issue is not the overwhelming blocking barrier that some people have thought it was back in the '70s and the '80s?

SEC. CHU: I think we can find a solution to disposal, maybe call me stupid or crazily optimistic, because there's time, because we can work up better solutions. The safety, I think, is less of an issue as well. I think the newer generation reactors are going to be far safe; in fact, ultimately, we will have passively safe reactors in the sense that, if you lose control of the reactor completely, then you won't get a meltdown.

The issue, actually, is a commercial issue. How do you increase the licensing speed? Because these are five, eight billion dollar reactors and if you have a 12-year licensing and building part, that's many billions of dollars which is not generating revenue.

REP. BILBRAY: Again, this falls in that category if the government allowed the technology to be used like the wind generator. Down the line on the technology issue, you know, we talk about setting efficiency goals and trying to think, allowing people to think, outside the box. Right in with a lot of this kind of challenge is does our regulation guidelines allow that? I'll give you an example.

In my district, I've got Aptera, which is developing a new car that went out and started reverse engineering, designing the most aerodynamic, most efficient system; was able to build a car that gets over 100 miles to a gallon at this time with the potential going out to 200 with hybrids. But when the companied applied to the Advanced Technology Vehicle Manufacturing Loan Program, even though the vehicle passes all the crash tests, all the safety tests, everything that we perceived as being a car, because the scientists saw that having a second reel in the back caused 25 percent reduction, they went to a three-wheeled vehicle, because it was three and not four wheels, it was not allowed to apply for this loan. Would you still then support the modification of these kinds of arbitrary lines so that they reflect outcome rather than product?

SEC. CHU: I certainly would look into that whether it's a three- wheeled car is not a car, which is essentially your question. You know, if it does all the things a car does, it might be a car.

REP. BILBRAY: In fact, Mr. Secretary, after you're finished with this hearing, if you go downstairs, the car is out front as an example of the kinds of things we need to do rather than having regulations to block it.

Speaking of government regs, you make a reference to the fact that we need to be looking at gasoline-like biofuels rather than working off of alcohol that takes a gallon-and-a-half to match traditional fuel.

In fact, let me just take another shot at ethanol, which I never pass up a chance as a former member of the Air Board, Duke just came out with a study that said, from the greenhouse point of view, it would be better never to plant the corn than to use corn-based ethanol, but when you talk about these non-food crops, would you be including in that the algae technology that we're seeing developed around the country?

SEC. CHU: Yes. You know, again, one doesn't really know whether the best solution to biofuels are biofuels through the conversion of the lignocelluloses material or through the growing of algae which, actually, can grow directly, lipids that can be converted to oils, diesel-like oils. The verdict is not in. The thing about the lignocelluloses, in a certain sense, it's more ready for primetime only because we have lots of agricultural waste already. The issue with algae, you would have to prepare a land or ocean, specifically, for this. There are also issues of whether escapes into the wild. But I'm all for looking at algae. Don't get me wrong.

REP. BILBRAY: Okay. There was reference in--

REP. GORDON: Thank you, Mr. Bilbray. Mr. Hall is going to lead the delegation downstairs to see if your vehicle quacks a little bit later. Ms. Edwards is recognized?

REP. EDWARDS: Thank you, Mr. Chairman, and thank you for being here today. I think this technical process is about the most guaranteed in the House that I have seen. When the program was started, I wasn't in Congress at the time, but I believe that it spoke to (Inaudible) employ newer (Inaudible) technologies and provide you with a process for payment, so I have some questions about the rules of the (Inaudible).

Why does the current debt, more than one year, what the rationale of this legislation is, like, guaranteeing loans to ensure technology, rather than making two different sets of contracts and some of the benefits of technology that perhaps traditional financing, I believe, is available?

And then, I'd like you to discuss the risks to taxpayers under this loan guarantee program because the taxpayers are sensitive towards 100 percent and I think they've already seen it on (Inaudible) that hold that (Inaudible) private? Martin does those functions very well and is that each year with this (Inaudible)? I'm wondering if you could address this for me.

SEC. CHU: Sure. First, in terms of the loan guarantees, there is a scoring of law and, if an industry makes an application, if it's a relatively mature industry like wind, you know that if you run the business correctly that it's likely that the business will be successful and the loan will be repaid. There is an official way of scoring these loans. The higher the risk of the loan, the more you have to, you know, have to have an allowance that says, okay, there's a higher probability that it won't be repaid, so then it doesn't go as far. I mean, right now, the idea was that the leveraging is 10-to-1, well, if the loan is $100 million dollars, you put in $10 million dollars that you expect will be "the average default rate." As you take on higher risk industries and you have to score this as best you can, then the default rate will naturally be higher because there's higher risk.

Actually, I agree with you, we should be making some higher risk loans and we have looked into this. That would be of the amount of you money you could have -- now, the higher risk loans are more experimental, and so, you can make a small attempt at trying to get this thing going, but there's nothing wrong with saying that there might be a 30 percent chance of a default on a loan, but it could be more game-changing. That's another way of trying to introduce innovative technology.

And so, they're having discussions now in the Department of Energy, I've been discussing this, that a small fraction of our loans could be higher risk that could be much more innovative, much more likely to fail, but could lead to bigger changes in the long run.

REP. EDWARDS: And so, you're about to announce some of the loan guarantees, and so, if you could assure us that we're not, at some point, we guarantee a much more mature take on all of these (Inaudible), can you clear that, if that default was in the first (Inaudible)?

SEC. CHU: Well, no. For example, in nuclear, there has been $18.5 billion dollars to help restart the nuclear industry, and so, that's been a carve out for nuclear and those loans are designated to helping our companies. We've had a dormant nuclear industry for the last 30 years.

The last one nuclear reactor that was started in the early-middle '70s.

REP. EDWARDS: Would that be true where there is some of the -- (Inaudible), those kinds of significant incentives in nuclear technology?

Just as I told them that you're (Inaudible) later, it basically guarantees the (Inaudible) that have been lost on here and there billions of dollars and I'm wondering if the (Inaudible) climate and our energy problem. What does that money (Inaudible) in one direction? The nuclear is going to be the one that will have (Inaudible)?

SEC. CHU: Well, I think there is no one single technology that's going to save us including and, quite frankly, you know, fossil carbon capture sequestration is one of those things. But right now where we are in the United States is we have only 2.8 percent, roughly, of our nation's electricity is generated with renewables, excluding hydro which is 6-or-7 percent. And so, it's going to take a while to ramp that up and the costs, in wind, is becoming competitive, but they're not there yet for photovoltaics, you know, costs without subsidy. And there are distribution issues, there are storage issues. I, for one, would very love to see a transition to all renewables -- solar, the wind, things like that -- by mid-century, but one doesn't really know if one could do that.

So you put the pedal to the floor on that, but you also try to ensure that while we're transitioning, you clean up coal as much as you can and don't forget that the rest of the world, notably China and India, will not turn their backs on coal. That's why it is so important to try to develop commercial viable sequestration methods.

I think you'll just have to do all of these things. You've heard this before, you know, there are no silver bullets. Just like you had said.

REP. GORDON: Thank you, Ms. Edwards. Mr. Smith is recognized.

REP. SMITH: Thank you, Mr. Chairman, and Mr. Secretary, thank you for your service and willingness to come here today and share with you, I think, one of our most pressing needs relating to energy, the economy, the environment and I appreciate the mention of so many sources of energy here today. There was mention of corn-based ethanol prior from one of my colleagues on this end of this. If you could elaborate perhaps.

Truly, I come from a district that is relating to corn-based ethanol and livestock production, so it creates a need for balance. I was wondering if you could speak to further research on corn-based ethanol so that we can be even more efficient? I know we've come a long way already using less water, making the ratios better. If you could elaborate on that.

SEC. CHU: Corn-based ethanol, I think, is -- I view it as, you know, if you do the lifecycle cost an there are varying opinions about this, but in the end, it brings you a little reduction, you know, in the amount of fossil fuel invested versus net fuel gone out, but the potential for the lignocelluloses approach or the algae approach is far higher. Right now, you know, if you take and you look at all these underlying assumptions for corn-based, also in CO2, the net CO2 reductions, we're talking about net fossil reductions of 20 percent and CO2 reductions of a similar nature, but the promise of lignocelluloses and algae can be 90 percent.

And so, now, in the end, farmers will be happy to plant anything that they can make some money on, and so, rather than saying we have to protect corn-based ethanol, I think, if we develop technologies that can use a lot of the existing infrastructure and the fermentation of starches like corn, it's the same type of infrastructure, they'll be using bacteria that will convert grasses and agricultural wastes into fuel.

I don't really see, personally, a conflict in terms of rural America and farmers. In fact, I've given a couple of talks over the years to that part of the country and they would like very much to be using their agricultural waste and also to be growing these grasses because these are perennials. In autumn time, the nutrients, especially the nitrogen, is drawn back and the precious minerals are drawn back into the roots. You chop off the top part, the cell wall with the cellulose is the energy stuff, we don't use the nitrogen, and so, that means a big decrease in the energy imports from fertilizer which is made from natural gas. Ammonia fertilizer is eliminated. A lot of the inputs in the diesel tractor fuel is eliminated. So less capital investment of the farmer each year because, each year, the farmer makes a gamble, you know, and a significant capital investment to yield a crop. If they can get a similar return or better return on investment, a similar overall net, they would be very happy.

I think, you know, corn-based ethanol, think of it as a transition crop to get Americans used to the idea that you can grow transportation fuel, but it is, by far and away, not the ideal. And that's why we're investing much more in lignocelluloses or algae. That's why, for example, BP, which invested in University of California Berkley and Berkley Lab in Illinois, have a billion dollars because they weren't interested in ethanol from starches like corn, they were saying, "That's not the long-term future."

REP. SMITH: It seems that the commercial viability of cellulosic ethanol, for 10 years, we've been told that it's about five years off. How close are we?

SEC. CHU: I think you're getting a different class of people going to this and this is true of the energy sector in general, not that people who were working on it 10 years were lesser scientists, but I think now there's a real mobilization. I mean, six years ago, I decided that the energy and climate change problem was so serious that I was willing to forego a very, very comfortable life at Stanford as a Professor and run a national lab which is much less comfortable. And for the same reason why I took this job which is even less comfortable, that many scientists are thinking that this issue -- this is one of the most important issues that science and technology has to solve in the coming decade and it's becoming such an important issue and an internationally important issue because, as commented in this committee, it does help define geopolitical stands around the world as well.

So international security, economic prosperity, environmental concerns, all say that we've got to solve the problem.

Because of that, just as in World War II, many scientists volunteered and enlisted to serve their country, I'm seeing now many scientists thinking, "If there's something I can do on energy, what can I do?" And they're trying to teach themselves. Also, a new idealism in America's youth in college that they're actually thinking of going into science and engineering because they see this as a way to serve the world and their country.

When you have that enthusiasm in the scientific and engineering world and you harness it properly, I think you can get -- we can expect much greater progress. And this what the Department of Energy funding really is all about, quite frankly, to take advantage of that.

REP. GORDON: Thank you, Mr. Secretary. Hopefully, this is the new Sputnik. And, Mr. Smith, hopefully, also, that shucks and cobs have a future so we can all win. Ms. Fudge, you're recognized.

REP. FUDGE: Thank you, Chairman. Good morning. Mr. Secretary, I have (Inaudible) America has a high of 86 percent of what's (Inaudible). This gives us an (Inaudible) costs that lead to lower costs in this poll. As we thought, we have many interviews set up. There is incentives each year -- (inaudible) -- that to buy across coal is the difference. This is especially -- (inaudible). Our Air Force, as a nation, has been active in giving demonstrations in support of some hundred officers -- (inaudible) -- more concerned with the -- (inaudible). Now, there's an instance as to how you've been able to minimize the effects that it has on these programs -- (Inaudible).

SEC. CHU: You're raising a very important issue. The cap-and- trade bill will likely increase the cost of electricity, and so, it's on the Administration's plan of using a significant part of that money. First, there are two issues. There is the poorer part of society that has to be guarded against, and so, part of the Administration's plan has been to try to ensure that the poorer segments of our society are not really hurt.

With regard to increasing the costs, let me go straight to the heart of the matter. Many of these costs will be passed on to the consumers, but the issue is how do we interact in terms of the rest of the world? If other countries don't impose a cost on carbon, then we would be at a disadvantage.

I think the only way to do this, and already the Administration and others have talked about it, that you have to think about if you have something that's manufactured in another country that is not imposing, including the cost of admitting the carbon because there's a cost in admitting the carbon, right, to society, if Country X doesn't do this, then I think we should look at considering perhaps duties that would offset that cost. Just as we're beginning to talk about that in terms of even what we call local pollution costs like sulfur dioxide and natural dioxide. That will help level the playing field.

Now, in the end, I think, one hopes that all countries will include the costs of this energy and I really think the value is in including the so-called external costs that are not folded into the direct price now, but if a country does not do that, in order to protect the American industries, we ought to think about something like that.

REP. FUDGE: (Off mike.)

REP. GORDON: I hope so. I think there are, in very energy intensive industries, at least some of them that I know about, they, themselves, are looking very hard at the manufacturing processes or chemical processes because if they save just a little bit on making it more efficient, this is tens of millions, hundreds of millions of dollars, so it matters a great deal to the company. And the more forward-looking companies, they're much more aggressive about this because they see, in the long term, energy costs just increasing because, you know, in the long term, as noted before, energy, oil and natural gas production, will eventually peak and decline, plateau and then finally decline.

I think the energy efficiency of industries and companies is a very big deal and the Department of Energy will do what it can as much as possible to help encourage the companies to look at their own businesses.

REP. GORDON: Thank you, Ms. Fudge, for getting those important issues out here on the table. We need to talk about them. Dr. Ehlers is recognized.

REP. EHLERS: Thank you, Mr. Chairman, and thank you, Secretary Chu, for being here. We'll give you a little relief. I have very few questions and several statements and comments, but I hope we'll have aggregate time to talk about my questions later.

SEC. CHU: Maybe the Chairman can give you an extra five minutes.

REP. EHLERS: I doubt it. There is a majority here and a minority.

REP. GORDON: You want to go home for dinner, don't you?

REP. EHLERS: First of all, I'm absolutely delighted with your appointment, and I have been very disappointed for some time in the, in what I consider the failure of the Department of Energy to really meet the important energy challenges of our nation. And I'm really looking forward to your leadership, and I hope it becomes a renaissance similar to the days when Glenn Seaborg and the Atomic Energy Commission really got the ball started on this.

So I'm looking forward to great things. I also want to commend the department. Recently they had a competition for facility for rare isotope beams. And I want to commend you and especially the department. I thought they did a very fair process and evaluation. And obviously those of us in Michigan are pleased with the result. But I think it was, it was a model of how it should be done, and how the department can work with the universities.

On that score, that's the one strong point I see for (ARPA-e ?). I was not overjoyed with the way it ended up being structured. But I think this is a golden opportunity for the Department of Energy to essentially take a role that National Science Foundation fills for many other areas of research. And I hope (ARPA-e ?) really fulfills that promise and brings the universities in. We have so much talent available in the universities. And I don't think the Department of Energy has adequately made use of the university resources in the past 20 years or so.

The one exception of that, is of course,) is Ray Orbach who has done a marvelous, marvelous job in the office, Office of Energy in the past eight years. And I'm just -- we made so much progress there, and I assume you'll be eager to continue that progress as well. A few comments on some of the other issues. I -- there's a lot of talk about sequestration. I am still very much a doubter. I think, I think just looking at it, it looks to me like it's going to be very difficult to do it in an economically feasible way, particularly when you're talking about China and India doing it. Obviously we have the resources to do it.

At least we hope we do. But I, I just have to register some skepticism on counting a lot on clean coal, or sequestration to deal with the carbon problem. And that's going to take a lot of work on your part and our part as well. The, one other comment, it's always bothered me, I'm talking about Yucca Mountain. We've always talked about disposal of nuclear waste. You don't, not disposing of it, they're still there. And I think that's been a fallacy all along.

We thought we could dispose of it. We can't. We can, perhaps transform them into more benign form. And that's a possibility. But I think we should get rid of that word disposal and talk about nuclear storage, particularly monitored retrievable storage, things of that sort. On solar energy, you put a lot of emphasis on solar energy, but you seem to imply the use of, of large facilities to produce electricity, solar energy. I'm of a different mind. Since solar energy is, there is huge, huge amounts of solar energy available. But it's very diffuse, and that makes it difficult to use. It's, it's low quality energy.

And I think we, we ought to recognize that. I think the best answer, if you want a diffuse source, then have diffuse collectors. I would love to have every home in America shingled with solar shingles instead of asphalt shingles. And that brings up the other issue you raised. If we're going to do that, one of the most pressing needs is going to be safe, efficient, economical storage of electrical energy. You refer to it in the context of automobiles.

I think maybe equally, or perhaps even more important in homes, if we can, in fact, develop good solar shingles that are dependable, long lasting, etc. We need a storage mechanism. And right now batteries are too expensive, too clunky, too difficult. And I would hope that the department would be able to make some major contributions in terms of battery development, and particularly returning that industry to America instead of depending on other countries to do the research. So that's pretty much my short sermon for today. And I hope you will take those comments in mind.

REP. GORDON: Thank you, Dr. Ehlers. We'll let you be on the next panel. Mr. Wilson is recognized.

REP. CHARLES WILSON (D-OH): Thank you, Mr. Chairman. Thank you, Mr. Secretary -- (inaudible) -. My question goes to clean coal technology. On several occasions the president has said he supports clean coal technology. Mr. Secretary, right now I have a -- (inaudible) -- nuclear plant that is -- (inaudible) -- in my district. I happen to believe that coal --(inaudible) -- is a good form of coal technology. Interested in what your opinion is. Clean coal -- (inaudible).

SEC. CHU: I think coal to liquid that would capture a significant part of the carbon, the excess carbon, is something that's worth looking at. I'll go further to say the when you start doing coal to liquids, that the first thing you do is gasify, and then you assemble -- an old processing vented, from World War II, the Germans. When you do it with agricultural waste and coal as the feedstock, and capture the excess carbon, when you produce the fuel, and very, or course that carbon in that fuel is released back to the atmosphere. But you can actually provide, for example, that's all bio based.

You can actually provide a net sink of carbon dioxide, because the plant's just grabbing carbon dioxide out of the air. Some of it goes back in the form of carbon dioxide when you burn it, but you're actually capturing a lot of carbon dioxide if can get sequestration to work, which, with all due respect, I think there's a reasonable chance, then it becomes a net sink. And so, there are proposals out of getting ultra hybrid plants.

So coal with bio material to liquids capture the excess carbon dioxide, and it could be a hybrid plant in sense that you could also use it to generate electricity.

And so, I think Professor Bob Williams (ph) at Princeton is one of the major proponents of this. I know that Dow Chemical is looking at this as a, because they're, Dow Chemical is essentially carbon company. They buy forms of carbon, for example, natural gas and petroleum and turn it into other forms of carbon, namely plastic. And so, if they could get bio waste, or even coal as their feedstock, that would be a nice thing to do. And if it can be captured, you can capture the carbon and sequester economically, then it's clean in the process. So I think those are things that I am actually personally looking into, to see if they have a ghost of a chance of working.

REP. WILSON: Mr. Chairman, if I may, Mr. Secretary again. We have, we have done the studies -- (inaudible) -- as you've alluded to earlier, are somewhere between half and three fourths -- (inaudible). The next issue we felt -- (inaudible) -- to a clean coal technology versus one that would not, do you have any thoughts on that -- (inaudible)?

SEC. CHU: That's right. I mean the risks of, again I, if it's a, if it's a technology that hasn't been tried before, there's a great deal of risk to that. And so, then it's scored much more seriously. And then we, we have a certain amount of money we can use to guarantee the loans. The loans, because you're expecting certain loses. And so, so that's the issue. We make fewer loans the riskier it is.

REP: Well that, you know, when you look at the grand scheme of things, and with the way nuclear is doubling in price, and continuing to go forward, I really hope that the department will look at what the opportunities are with using coal, and investing in it may be much less expensive than going to continue with the nuclear, and as the chairman said recently, we still wind up with the rods at the end of the time. And so, what do we do? I mean, how do we move forward if we have a mentality that keeps us from moving forward coal, clean coal?

SEC. CHU: Well, it again goes back to the fundamental question, can we develop methods of capturing the carbon? Most of the cost is in actually the capture. It's not in the storage. The storage and monitoring are, I know, a couple of my personal friends who are experts in this. And we have been doing experiments, couple of million tons a year in various sites around the world. And the Department of Energy is sponsoring more in the sequestration part, that's whether it can be done safely and adequately monitored. But it's the capture part that's the real cost. And we've got to figure out ways of doing that better.

REP. WILSON: Thank you, Mr. Secretary. Thank you, Mr. Chairman.

REP. GORDON: Thank you, Mr. Wilson. What we're bothered to wait for (ph) Mr. Rohrabacher is recognized for five minutes.

REP. DANA ROHRABACHER: (R-CA): Thank you, Mr. Chairman, and happy St. Patrick's Day to us all. And Mr. Secretary, it really is refreshing to hear your testimony today, and I look forward to working with you in the years ahead. And am very pleased with your appointment to this important position. But let me not disappoint my disappoint my chairman by noting that it has now been seven years since there's been any warming recorded on the planet. That's why, I guess people have changed the wording to, now it's not global warming, now it's you know, something to do with climate change. There are prominent scientists, more and more prominent scientists every day, joining the ranks of those who are suggesting that the whole global warming theory is bogus. And I would add ten names of prominent scientists, which I will at every one of our hearings, who are now joining the ranks -- prominent scientists, heads of major universities, science departments from throughout the world. And I will now submit a list of ten of those names for the record.

REP. GORDON: Without objection.

REP. ROHRABACHER: Thank you. Thus, cap and trade and carbon sequestration are wastes of money. They are aimed at the global warming theory. However, your efforts for energy self sufficiency, and protecting the health of human beings by having cleaner fuels is certainly appreciated here. And I will be very happy to work with you on those areas in the future. Let me note for a couple of examples, I will draw your attention to the work done at the University of California at Davis, which is aimed at bio-tech and the production of energy that way.

I would also call your attention, and again I very much appreciate your openness to nuclear energy. And I would suggest that one way we can have cooperation internationally, cut down the cost of getting to the point where nuclear energy is brought back on line, is the development of a high temperature gas cool reactor, which could, which lends itself to cooperation with the Russians and gets rid of a lot of the problems we talked about, including the Yucca Mountain problem. In fact, there'd be less waste stored at Yucca Mountain if we use high temperature gas cool reactors.

And finally, let me mention to you, and draw your attention to a report that I have here, which is a report that suggests that a space- based solar power could be put, brought to service in a very cost effective way. We could use it to provide energy to Third World countries without having to build huge plants in those Third World countries. We could provide energy for our military in emergency situations. And I might suggest that this committee would be able to work with you, because we also oversee NASA. And it would also be an area of great international cooperation, again with the Russians to build space solar power units that could provide clean electricity for the world. Those are just a few thoughts, and I wonder if you have any thoughts on space solar power, and the high temperature gas-cooled reactor.

SEC. CHU: With space-based solar power -- I know -- (inaudible) -- is a big fan of this -- I'll be frank, I'm a little bit skeptical. Anything you put up in space costs a lot of money.

REP. ROHRABACHER: You know, the Russians have cheap ways of getting things into space. We should be trying to develop our own cheap ways of getting into space. What about high temperature gas cooled reactors?

SEC. CHU: High temperature gas cooled reactors is something we should and will be looking into. Because it also, if the really high temperature is, opens up the possibility of generating hydrogen, and the hydrogen is like a battery, quite frankly.

REP. ROHRABACHER: There is a high temperature gas cooled reactor, the only one I know, functioning in Japan, I visited that facility, would suggest that it really offers a lot of promise. One last thing, there are a lot of other ideas that offer great promise to producing clean electricity. And, I might add, again, I could care less about, I believe the global warming theory is bogus.

But clean, clean energy to protect people's health and to provide energy self sufficiency is a great goal which you can count on cooperation from all of us. There are things developing -- one last concept. There is a fellow out in California, Mr. Chairman, that has a paint that's based on nanotechnology. I've been encouraging this company in this development that will make houses into solar collectors, which are much more efficient, even than photo voltaic cells. Have you heard about this?

REP. GORDON: Well, we'll have to hear about it later. Mr. Rohrabacher, you never disappoint. I thank you for being here. Let me, if I could, maybe lay out some rules of the road for the rest of the hearing if no one has an objection. We had told the secretary that he could be able to get out by noon. We're going to impose upon him to stay another 15 minutes to a quarter after. So we want to try to be crisp. Unfortunately I have another obligation, and Mr. Wu is going to take over here. Let me just say, Mr. Secretary again, thank you for being here. At first view, someone might not think that you're all that exciting. But this has been a very exciting hearing, and an exciting topic. And it's going to be fun moving forward with you. And Mr. Lipinski is recognized, and Mr. Wu, if you would --

REP. DANIEL LIPINSKI: Thank you, Mr. Chairman. And, is this microphone working? It's working, isn't it? This one's working. All right. I'll try to stay away from my, I don't want to get up and start wandering around. I have this microphone. But let me say, Dr. Chu, or I'll just feel this out. People say Dr. Chu or Mr. Secretary, I think may Dr. Secretary, I don't know if that's the correct way to refer to you. But I was excited when you were nominated to be the Secretary of Energy.

I know that couple of years ago, I think it was about two years ago, I sat down with you at Lawrence Berkeley Lab, came to visit, and we had lunch. And at that time, I was very impressed by, obviously with (Bell Lab ?) -- your knowledge of, your field is great, but on top of that, much more importantly, especially in this job is your ability to, to really very fluently discuss and understand and deal with the policy.

So I was excited. At least I was excited when you were, were named the Secretary of Energy. I want to bring up something that we had talked about.

Start out, something we had talked about now, during that lunch, and was brought up earlier was the Energy Biosciences Institute, collaboration between LBL University of Illinois Urbana-Champaign, and BP. I think that these are, this integration of the national labs, universities and industry are very critical. I know you feel the same way. And in your confirmation hearing, you stated that DOE will better integrate national lab, university and industry research. So I wanted to throw a general question out to you about, what specifically do you want to do at DOE? What do you want to see DOE do differently, maybe? Including funding initiatives or models in order to get, make this collaboration really work well. And let me throw this other question out there while we're on this issue.

We want to integrate universities and labs along with industry, but what about any, do you see any problems, any real competition, to some extent, between universities and the, and the labs? Because that's also an issue that sometimes does come up. But I'm just interested in what you, what you would like to see, and what your plans are at DOE for this, to help this collaboration.

SEC. CHU: Well, in terms of the integration, further integration of industry with universities and with national labs, I would like to see control of companies or individual companies actually work with scientists at these universities, actually develop the intellectual property together. That goes a long way. So very, very quick story. The, I was asked to go and give a dedicating speech for Dow Chemical, in Midland. And so I flew in and gave a speech, talked to the chief technology officer, CEO and others, and then they came over to Lawrence Berkeley Lab. We decided we had a lot in common, so he came over and chatted a little bit more, and said, well look, this is no good if I'm just talking to a chief technology officer. We've got to get out scientists and engineers to talk to each other.

So the next time they came over, we had a one day thing where the scientists and engineers from Dow would talk about their (four talks ?), and they talked about their projects. And the people at the University of California at Berkeley and Berkeley Lab, which is very integrated actually -- roughly 270 of our scientists are professors at UC -- listened and said, so the intent was, this is what Dow's interest in developing, do we have some knowledge that can help them?

And to make a long story short, one of the chemists at Dow said, while we like to make water soluble products, we don't want the water in our processes. Because water absorbs a lot of heat, it undergoes stage (ph) changes, all that loses energy, and we're trying to drive out the energy cost. So we actually don't want our processes to use water. Because you've got to recycle the water anyway. You can't just dump it out. And so we'd rather use organic liquids.

I leaned over to one of our chemists, did you know that? You don't want water in the processes? No. And how would they? They go to the sink, they turn the tap, water comes out free. So, so, when we start, or when people in universities start to do research, again, it goes back to manufacturability, it goes back to industrial processes. Industry actually knows a lot more about those things. And so, rather than go down the line and develop intellectual properties, it ends up being not very practical from an industrial point of view. Let's get them together early. And so, this is what I mean by industrial collaboration. We're working on industrial collaboration with United Technologies to try to put together a consortium of companies that pre IP (ph), this is pre competitive research that all companies could use for building efficiency, that could work with Berkeley Lab and with U.C. Berkeley. Again with the same idea in mind. So it's things like that I think, we can have the opportunity to work on.

REP. DAVID WU (D-OR) : Thank you. I look forward to working with you. I also want to, I won't do it now, but at sometime in the near future I'd like to talk to you about the advanced battery manufacturing program funded in the American Recovery Act, and as I look forward to working with you, and even though you did go from Stanford to Berkeley, I won't hold that against you. Yes, I was a Stanford grad.

SEC. CHU: Well, I have loyalty to both institutions that you mentioned (ph), deep loyalties in both.

REP. WU: Divided loyalties. Dr. Chu, let me assure you that I find you very exciting. Next, the gentleman from Georgia, Dr. Broun. And let me just mention to members that although you have the absolute ability to take your full five minutes, if you want to consider your fellow members and take two or three minutes instead, then we'll be able to get through all of the folks who are asking questions by 12:15. Dr. Broun, please proceed.

REP. PAUL BROUN (R-GA): Dr. Secretary, do you realize that there's absolutely no, in fact zero consensus in the scientific community about human induced global warming?

SEC. CHU: No, I don't, I beg to differ, actually.

REP. BROUN: You're absolutely dead wrong, Mr. Secretary. There's a tremendous number of scientists who would absolutely debunk any human causes of global warming. And I think just for scientific integrity, I ask that you go and look at those things because there is no consensus.

Are you and this administration absolutely determined to shut down the U.S. economy, put people out of work, markedly raise the prices of food, medication, all goods and services which will particularly hurt people on limited income and the poor, to pursue a policy, this cap in trade, I call it cap in tax policy, that is not only questionable scientifically, but in fact has been shown scientifically that human activity and carbon dioxide release has very minimal if any at all significant effects on global warming. Are y'all so determined that you're going to shut down the economy and hurt these folks to pursue this kind of policy?

SEC. CHU: Well, the primary goal in this administration, first and foremost, is to get the economy going again. That the unemployment rate is exceeding eight percent are very, very scary. The shut down of the credit markets, all these things are very, very scary. I mean, one out of 12 Americans is now out of work. And so, first and foremost, we need to restart the economy, because there is a lot of pain out there.

Now, given that, I don't think, seriously do not -- again disagree that, what we're trying to do in the Economic Recovery Act is to start the building out phase towards more energy independence, towards much more efficient use of energy and developing new sources of energy, rebuilding, in addition to the transition and distribution infrastructure, all those things are, are also increasing the investments that will help the economy restart. And in addition to that, it helps in the overall goals of our economic prosperity, our working towards oil, foreign oil dependency, decreasing that, and getting off the dependency. And environmental issues.

We do, apparently have fundamental disagreements on what the science is saying. Let me just say in terms of that, that science is a very, very peculiar sort of thing in that, in that if a scientist comes along and disproves what most of the scientists think, and turns out to be right, that scientist is actually hailed as a hero. I mean, that's the fundamental structure of science. Einstein comes along and says Newton was pretty good, but he got some things wrong at certain areas. Very high velocity, for example, or high gravitation. He's a hero.

People who developed quantum mechanics, similarly, they over flew the prevailing view, and they become, they get Nobel prizes for that. So, so the protection of science, and the truth will out in the end because of that fundamental issue. And so, yes, if scientists come forward and show that this is all wrong, they will be heroes. And so, people are constantly checking and, and doing things. But in, again, when I started to look into this, maybe six, eight years ago, and started as an amateur, but read more and more about it, I became more and more convinced that these are very real issues.

REP. BROUN: Well sir, I'm a physician. I'm a scientist. I'm an applied scientist, and I believe in scientific integrity. And if you'll look at a lot of other writings that are peer review, there are many sources of data that show that human induced global warming is a myth. And I request that you take off your blinders and bias and look, because there are many, many scientists who would debunk this whole idea. And it's going to kill our economy, and it's going to particularly hurt poor people, and people on limited incomes. And to go down this track, it's going to kill our economy.

We're spending too much, we're taxing too much, we're borrowing too much. And we've just got to stop it. I think everybody on this committee, everybody in congress wants to see the economy on again. But going down this track of cap and trade, or cap and tax is the wrong way to go. Thank you, sir.

REP. WU: I thank the gentleman. The gentleman from Kentucky, Mr. Chandler.

REP. BEN CHANDLER (D-KY): Mr. Secretary congratulations to you. And best regards from your friend Len Peters (ph) back in Kentucky. I would like for you, if you could, to talk a little bit about electric cars. Do you believe that they are, indeed the future of our personal transportation system? And could you give us a little bit of a timeline on the development of them, development of batteries, development of distribution systems, etc, thank you.

SEC. CHU: Okay, and very quickly, yes, there, I think electric cars have great promise, because most people, you know, they're not going to look for long distance trucks. They're not going to work for long distance transportation, but most Americans, I understand, travel typically 40 miles or less, 50 miles or less per day to and from work. And so, if you can get electric vehicles that have a range of 48 miles with some backup, or, that could offload a lot of the oil we import, significant amount of it, and give us more options for generating electricity. It also, by the way, allows a dual use in that, if you have solar panels on your roof, as an example, you can charge up your battery of your car. It allows you to buy energy at nighttime when it's very expensive. There's excess capacity, and use that, and so the investment's in power generation.

So there's a lot of very good things about electric vehicles. You put your finger right on the nub of the issue -- the battery. All the other parts, we know how to do very well, and right now, we don't have batteries that can survive deep discharges. The previous batteries held between 40 and 60 percent of full charge the entire lifetime of the battery and usually actually much tighter for most of it, 55 to 45 percent. Because if you deep discharge the battery, well, we know, we do the experiment on our laptop computers.

After a couple of years of deep discharges, guess what? It's holding half the energy. And that's bad, because right now the cost of batteries is quite high as well. The estimates, for example, on the Chevy Volt, that battery that gives you that 40 mile range will be on a scale of $10 to $12 thousand dollars. So that battery is a significant part of the total cost of that car and it better last the lifetime of the car. Now, the good news is I know of some battery research that has promise. There's great opportunities.

Once, in a former life before I took this job, I was actually on the scientific board of a battery star company. And there are certain areas which actually have incredible amounts of progress that can be made. Batteries that could be inherently much safer, safer in the sense that they won't go into these very high temperature fires. This particular company developed an electrolyte that allows the lithium ions to go across that is inherently nonflammable. If you can create a much safer battery, that also will drive down manufacturing costs a great deal, because it's the very tight manufacturer tolerances of our current lithium ion technology that drive the costs way up.

The materials, the cobalt that's used on the cathode side, we need to substitute. There are opportunities in batteries that I see that could give you this factor of two or three in energy density and make it much less flammable. That means you'd ease up on the very tight manufacturing tolerances, and that would drive down the costs as well. So, I'm actually hopeful. But you're asking me to predict when this new generation battery will occur.

All I can say is, again, going back to this other view that people are, batteries is a big deal, not only for cars, but for large scale energy storage, for residential storage, for building storage. Because if we can get the batteries, and going to your point originally, that this is, there are a lot of applications for batteries. Even to level out the transients when clouds roll over a solar farm or the wind sputters a little bit, you actually need batteries. So, many, many applications, and one of the things I would like to do is not only to invest in batteries for cars but batteries for all these other applications.

(Audio break.)

REP. CHANDLER: Helping the economy, as you mentioned, particularly helping the economy is essential to any policy that we pursue. I want to talk a little bit about cap and trade, as is in the president's budget, or as Mr. Brown referred to it, as cap and tax. I want to throw some facts out there that a number of different groups have put out and I think there's pretty much a consensus, but including the EPA, and many others, estimate that it would be a decline in GDP if cap and tax is implemented. A number of groups estimate that it would be a loss of millions of jobs, and again, a number of different groups. Just about everyone understands and there's a consensus that cap and tax or cap and trade will increase electricity rates.

You mentioned that yourself a little while ago, on American families, on American businesses, by anywhere between 44 to 129 percent, which, by the way, is way above what the president is proposing to subsidize some families in his budget, so they're way above that. Gasoline price increases between 61 cents to $2.53 per gallon. Natural gas cost increases between 108 percent and 146 percent. To sum it up best, you know, you're, the president's own OMB director, who used to be at CBO, stated September 18, "Costs will be passed along to consumers in the form of higher prices for energy."

I don't think that's debatable. Again, that's Mr. Orszag. He also stated that, "A 15 percent cut in CO2 emissions," which, by the way, is 80 percent less than is sought in the president's budget, "would be an average annual household cost of $1300." These are substantial numbers. So these are some of the facts.

Now, you stated in your testimony and in answering the questions, by the way, which I think relate, that the U.S., by the way, can't do this alone, obviously, China being the big 800 pound gorilla as far as CO2 emissions. The Associated Press today has an article where they quoted the Chinese director of climate change, the Department of Climate Change, saying that nope, that China will not be charged for that, that the U.S. importers of products made in China that produce high CO2's are going to have to pay the cost, in essence. So, in essence, like you mentioned, you know, that it's cool, it's good to be cool, to be energy efficient.

Clearly, quoting another one of those sayings, China just said no, one more time. This is the same China that just recently harassed a U.S. military ship, the same China that murders dissenters. We know who we're dealing with. So here's the question.

That being the case, and you said that, you stated in other words, I don't want to put words in your mouth, that obviously, we can't do it alone, China being the big player, will this administration then change the policy regarding cap and trade or cap and tax, or will it go forward regardless of those facts on how will it impact the economy, and particularly if China says, nope, you know, we're not going to play, and how will policy be guided by the cost on the U.S. economy and the U.S. family, regardless, because again, as I said, that partial subsidy just won't cut it. The numbers are there. They're pretty plain. So, will this administration, and will you look at all those facts, and are you willing then to take a step back and say we're not going to do this because the price is too high, the economic price is too high, and China just won't play?

SEC. CHU: Well, I --

REP. CHANDLER: China, and others, I guess, too. Not only China. I guess China's the big one but there are a lot of others that --

SEC. CHU: Well, there are plenty of actually 800 pound gorillas when it comes to carbon emissions. It's China and the U.S., I think, the two countries together. China has recently passed the United States, but those two countries emit approximately half of all the carbon in the world.

I'm not, I don't, you know, my understanding of the numbers of the costs are far less. I do know the IPC and also, IPCC in its latest report and also the Stern Review report that Nicholas Stern chaired, those two reports estimate, in order to hold carbon emissions down to a level which the climate scientists feel is prudent, risk management is somewhere between one and two percent of GDP.

Now, the costs of one or two percent of GDP is not insignificant by a long shot. That's a lot of money. But then you have to weigh that against what could possibly happen if we did business as usual. And so then it becomes an issue of what those potential risks could be. And while one can't say with 100 percent certainty that such and such will happen, it's again talking about probabilities --

REP. CHANDLER: I'm sorry, sir, but you do know that we can say it will certainly cost the economy. I mean, that we can say.

SEC. CHU: That's true.


SEC. CHU: So let me, so this is risk management in the following sense. One can't say with certainty that your house will burn down. In fact, in most cases, your house does not burn down, and yet, we all have fire insurance, because it's part of that because should disaster strike, it's very important. So, if you, let's pretend there's, let's say an 80 percent certainty that the western part of the United States will lose a lot of its pine forests and there would be less storage, less snow pack, therefore, less storage of water.

The economic cost of that could be much, much higher. It would be much, much higher. And so, it's not 99 percent certain, but say it's 80 percent certain. Then we as a country will have to decide whether we want to pay this extra money, and it is real money, to invest. And so that's really the issue that I have.

REP. CHANDLER: But again, how about the issue of China saying no?

SEC. CHU: China saying no to what?

REP. CHANDLER: To them paying for, I'm sorry, Mr. Chairman, but I'm, they're basically saying the United States has to pay for our emissions.

SEC. CHU: I think it's very important that all countries, developing countries and developed countries, start to limit their carbon.

REP. CHANDLER: But if they say no, do we continue to pursue this policy, or do we not?

SEC. CHU: I think I'm actually optimistic that China, because China realizes that the consequences of climate change are very real to their country as well, good economic policy --

REP. CHANDLER: But if they say no? But if they say no? That's my question.

SEC. CHU: We talked about, in terms of international trade of adjusting duties as a way. Because again, we don't want to disadvantage our industries at home.

REP. GORDON: I thank the gentleman and the secretary. We are running hard up against Chairman Gordon's 12:15. I do want to give Mr. Tonko his five minutes, but if he would proceed quickly, and if it's possible for the other three members who are here to ask something quickly, with the Secretary's forbearance? Thank you. Mr. Tonko, the gentleman from New York.

REP. PAUL D. TONKO (D-NY): Thank you, Mr. Chair, and Secretary Chu, thank you for joining us today. I do believe that President Obama expressed great leadership when he nominated you to be secretary and I'm empowered for all energy consumers by your appointment. I share the vision that President Obama and you have etched for this nation in terms of innovation as it relates to energy, and I particularly appreciate the boldness with which you've expressed that vision and the laser sharp focus. I appreciate the research and development impacts that you think we need to continue and deepen and certainly want to express a concern for energy efficiency so that we can focus on demand side solutions, rather than just supply side.

Quick question. On the advanced battery technology of which you spoke, and rightfully for transportation sectors and for energy generation and other aspects, what is your thinking in terms of diversifying that sort of battery technology? Should we go down the path of one type of battery, or should we make it the efforts, the mission of your agency, to encourage diversification amongst battery technologies?

SEC. CHU: Definitely diversification. And we intend to find what we think are the most promising ideas. We don't want the whole world marching towards incremental improvements of a specific technology. Absolutely, we want, and so, again it actually goes to the issue of different types of batteries for different uses as well.

REP. TONKO: Thank you. And also with energy efficiency, I served as chair of the energy committee in the New York State Assembly for 15 years and then went on to become president and CEO of NYSERDA, the New York State Energy Research and Development Authority. All the work we've done in efficiency, not just for manufacturing, but for businesses of all kinds, the dairy farms were tremendously powerful statements that reduced the demand. We are, per capita, one of the most glutinous, the glutinous societies in terms of fossil fuel consumption. The efficiency in the stimulus package is encouraging, but I know it's a function of resources. We need much more. What are your thoughts on how we can best advance the efficiency agenda?

SEC. CHU: I think part of it is helping you people realize just how low hanging this fruit really is, or as I like to say, it's fruit on the ground ready to be picked up. Let me just give you one example. Refrigerator standards, the energy efficiency refrigerators from 1975 to today, the energy consumption in refrigerators, even though the size went up, went down to only 25 percent of the refrigerators of 1975. Had we been using those inefficient refrigerators of 1975 today, we would be using a lot more energy. How much? More energy than all the renewables that we produce today.

REP. TONKO: Thank you. Just a final comment. I would encourage us to strongly focus on developing resources for energy retrofits, efficiency, or retrofits for our workplaces and our homes. But thank you very much for your leadership.

REP. GORDON: I should have known better than to expect public servants and a professor to be brief. (Laughter.) The gentleman from South Carolina, Mr. Ingles.

REP. BOB INGLES (R-SC): Thank you, Mr. Chairman.

REP. GORDON: Quickly, please.

REP. INGLES: Doctor Secretary, thank you for your service. You know, I wonder if even we could stipulate to the folks that say there's no climate change, even if that's true, perhaps we could get them to come along and try to break the addiction to oil and to create the jobs of the future by doing what they know, or will soon find out, I think, has to be done, which you have to internalize the externals associated with some fuels that we use and if you do that, then we unleash the power of the market place to do what those who we've heard from today, who don't think there's any climate change, nevertheless want to do, which is see the private sector succeed.

I wonder if the best way to do it, though, is not by cap and trade, which we've already heard tagged as a tax increase, and a system that will trade credits when Wall Street is not very favored right now, and it got 48 votes for cloture in the Senate before all of that, before a recession and before the Wall Street disasters.

I wonder if a revenue mutual cropping tax, that's transparent, that starts with a reduction of taxes in payroll, creates no additional take to the government and does what you very wisely pointed out, has a border adjustment so that we don't disadvantage American manufacturing vis-a-vis other manufacturers. I wonder if that's our collaboration opportunity, to go forward to a solution for America even with folks who doubt the underlying premise of climate change.

Do you think it's possible?

SEC. CHU: Well, I think the administration is very strongly going towards cap and trade and it supports cap and trade. There are other issues for wanting to do that. Let me just say that Europe is going this way, and so whatever we do, we have to interface with the rest of the world community, and to make these programs look similar. And so, as you correctly said, it is about incorporating all the external costs of our energy into the product we buy, just as when we decide we're going to treat sewage.

Does it increase the cost of water? Absolutely. But the overall cost actually goes down because the consequences of putting untreated sewage in a river downstream are much, much higher than just treating the sewage. It's also true of sulfur, dioxide that it does increase the cost, but it doesn't really. It puts the cost actually where it should be, in the product itself. And so I think we're in total agreement. But, you know, I think cap and trade has the advantage, at least one advantage, in that it's easier to interface to where the rest of the world is going.

REP. INGLES: Thank you, Mr. Chairman.

REP. GORDON: I thank the gentleman. The gentleman from New Mexico, Mr. Lujan. Two minutes each for the last two questioners, please.

REP. BEN R. LUJAN (D-NM): Thank you, Mr. Chairman. I don't think I'll take that long. Mr. Secretary, it's an honor to be here with you today as well. I recently extended an invitation to visit Los Alamos National Laboratories and I hope that we can begin to engage in a dialogue on when we can get you out there to really highlight some of the areas where there is research taking place, in Los Alamos and the areas of sciences with global climate change, super capacitor energy storage, hydrogen fuel cell technology and carbon sequestration.

What I want to emphasize, though, Mr. Secretary, is the reason that we're here today, which is with the emphasis of this committee hearing is of a new direction for energy research and development for the U.S. Department of Energy. I applaud the efforts of yourself and the administration and of the team that's been put together that has embraced science and technology. Not to, for any other reason, use science and technology to prevent progress, but to encourage progress, to advance job creation, not eliminate job opportunities as we move forward in the economy and the economic conditions that we're facing as a nation.

Mr. Chairman, I'll submit my question to the specifically to the secretary for consideration later, but Mr. Secretary, we're at a critical time right now and with your courage, and based on science and technological advances, the work that can be done to get us on the right footing and to make sure that this nation has the foundation in order to become a leader in the world where others will follow, is something that I really appreciate, and I look forward to working with you. Thank you, Mr. Secretary.

REP. GORDON: I thank the gentleman. The gentleman from Florida, Mr. Grayson.

REP. ALAN GRAYSON (D-FL): Thank you, Mr. Secretary, and thank you, Mr. Chairman. If we had commercial fusion power today, we'd have energy independence, we would reduce or eliminate oil imports and we'd have no CO2 emissions at all from that particular source of power. Now, in the case of fission, we went from military applications to commercial energy applications in less than ten years. In the case of fusion, we've had military applications for 50 years and we're still waiting for those commercial applications, despite 50 years' worth of effort.

We've lost of our lead in fusion research to the European Union, and now we're number two at best in an area that's bound to be an important part of the 21st century economy. And I'm wondering if the reason is simply money. I understand it's been estimated that $100 billion would be enough to develop the commercial application of fusion energy and to free our economy from dependence on Mideast oil. One hundred billion dollars is less than we spent on the AIG bailout, it's less than one year of the cost of the war in Iraq. And if that were the case, then we'd be free for all time. I'm wondering, Mr. Secretary, do you favor of Manhattan Project style approach to this problem that would dramatically increase our spending on fusion energy in order to make us energy independent?

SEC. CHU: I support a Manhattan style investment of this country and the world in all the parts of energy supply and demand that can reduce, so that we can, as a world, transition to sustainable use of energy. Fusion is a difficult question because it is a very long time field. There are very hard problems, and I think dramatically increasing the budget for fusion, right now, the ITER project has a path to go. It's still an experiment and ultimately, even if ITER works very, very well, there would be, then, as anticipated, a so- called demo style type of thing, still a pre-deployment thing, but getting on the way to there and the time scale for that is sort of mid century.

And it depends ultimately on the cost of fusion. If we can get fusion's cost down, that's the real issue. First we have to show that you can get more than break even, that it really is going to give a lot of yield. There are other prospects that one should be looking at, I think, and that is the so-called hybrid solutions of fission and fusion. The fusion creates the high energy neutrons that are used to convert a lot of the radioactive fuel and burn down the long lived radioactive isotopes and so there are prospects like that.

But ultimately, there is a timeline, if we increase the funding by a factor of ten, we will get there ten times faster? I actually think not. You know, it's a very, very hard nut to crack in terms of getting the controlled sustainable fusion that we need, and it has to be economically viable. And so we're not there yet, in terms of even. So I'm all for continuing to do research in fusion.

I'm all for looking at out in left field new ways of doing fusion. I mean, the ITER project, the tokomaks (sp) thing is one possibility. You know the path of that has now been charted and the world is following that, but there may be other opportunities.

REP. GRAYSON: (Off mike).

REP. GORDON: I thank the gentleman, and I thank the secretary. And before we bring the hearing to a close, I want to thank Dr. Chu for testifying before the committee today. The record will remain open for two weeks for additional statements from the members and for answers to any follow up questions the committee may ask of the witness. The witness is excused and the hearing is now adjourned.