[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
BLOWING IN THE WIND: RENEWABLE ENERGY AS THE ANSWER TO AN ECONOMY
ADRIFT
=======================================================================
HEARING
before the
SELECT COMMITTEE ON
ENERGY INDEPENDENCE
AND GLOBAL WARMING
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
MARCH 6, 2008
__________
Serial No. 110-27
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Select Committee on
Energy Independence and Global Warming
globalwarming.house.gov
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SELECT COMMITTEE ON ENERGY INDEPENDENCE
AND GLOBAL WARMING
EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon F. JAMES SENSENBRENNER, Jr.,
JAY INSLEE, Washington Wisconsin, Ranking Member
JOHN B. LARSON, Connecticut JOHN B. SHADEGG, Arizona
HILDA L. SOLIS, California GREG WALDEN, Oregon
STEPHANIE HERSETH SANDLIN, CANDICE S. MILLER, Michigan
South Dakota JOHN SULLIVAN, Oklahoma
EMANUEL CLEAVER, Missouri MARSHA BLACKBURN, Tennessee
JOHN J. HALL, New York
JERRY McNERNEY, California
------
Professional Staff
David Moulton, Staff Director
Aliya Brodsky, Chief Clerk
Thomas Weimer, Minority Staff Director
Jonathan Phillips, Professional Staff
C O N T E N T S
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Page
Hon. Edward J. Markey, a Representative in Congress from the
Commonwealth of Massachusetts, opening statement............... 1
Hon. F. James Sensenbrenner, Jr., a Representative in Congress
from the State of Wisconsin, opening statement................. 5
Hon. Earl Blumenauer, a Representative in Congress from the State
of Oregon, opening statement................................... 6
Hon. John Shadegg, a Representative in Congress from the State of
Arizona, opening statement..................................... 6
Hon. Hilda Solis, a Representative in Congress from the State of
California, opening statement.................................. 8
Hon. Emanuel Cleaver II, a Representative in Congress from the
State of Oregon, opening statement............................. 8
Prepared Statement........................................... 10
Hon. Eliot Engel, a Representative in Congress from the State of
New York, opening statement.................................... 11
Witnesses
Vic Abate, Vice President, Renewable Energy, General Electric.... 11
Written Testimony............................................ 14
Answers to submitted questions............................... 86
Blair Swezey, Senior Director, Solar Markets and Public Policy,
Applied Materials.............................................. 22
Written Testimony............................................ 25
Answers to submitted questions............................... 96
Bill Unger, Partner Emeritus, Mayfield Fund, Environmental
Entrepreneurs (E2)............................................. 37
Written Testimony............................................ 39
Barbara D. Lockwood, P.E., Manager, Renewable Energy, Arizona
Public Service Company......................................... 55
Written Testimony............................................ 57
Answers to submitted questions............................... 99
Bianca Jagger, Chair, The World Future Council................... 64
Written Testimony............................................ 67
Tom Buis, President, National Farmers Union...................... 72
Written Testimony............................................ 74
BLOWING IN THE WIND: RENEWABLE ENERGY AS THE ANSWER TO AN ECONOMY
ADRIFT
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THURSDAY, MARCH 6, 2008
House of Representatives,
Select Committee on Energy Independence
and Global Warming,
Washington, DC.
The committee met, pursuant to notice, at 9:43 a.m., in
Room 2175, Rayburn House Office Building, Hon. Edward Markey
(chairman of the committee) presiding.
Present: Representatives Markey, Blumenauer, Inslee,
Larson, Solis, Herseth Sandlin, Cleaver, Hall, McNerney,
Sensenbrenner, Shadegg, Walden, Sullivan, Blackburn and Miller.
Also Present: Representative Eliot Engel of New York.
The Chairman. This hearing of the Select Committee on
Energy Independence and Global Warming is called to order.
Yesterday, President Bush addressed the Washington
International Renewable Energy Conference to once again say
that the United States has to get off oil. But this
administration's rhetoric does not match the reality that it is
continuing to defend Big Oil at the expense of American
consumers, our economy and the planet.
After nearly eight years of this administration's backwards
energy policy, the oil companies now have us over a barrel.
Today, after OPEC refused to answer President Bush's plea to
open the spigots, oil prices broke yet another all-time record,
rising above $105 per barrel, up from $30 a barrel when
President Bush took office. And consumers are paying the price
at the pump. Gas prices have now reached a nationwide average
of $3.18, more than doubling since the President took office.
The prospect of $4 gas may be news to the President, but it is
not news to the American people, who are being tipped upside
down every time they fill up.
Skyrocketing energy prices are also hurting the U.S.
economy. The Department of Labor reported that the economy lost
17,000 jobs in January, the first monthly decline in four
years.
But we have a new driver of economic growth and job
creation waiting to be unleashed. We are on the cusp of a
renewable energy revolution. Last year, we led the world by
installing 5,244 megawatts of new wind power, roughly 30
percent of all new electricity generation installed in the
United States. Solar photovoltaic installation also grew by
more than 80 percent in 2007.
Transitioning to a green economy has the potential to
create hundreds of thousands of green jobs, generating economic
opportunity everywhere from the hearts of our cities to the
heartland of our country. An analysis by the Clean Tech Venture
Network estimated that as many as 500,000 new green jobs could
be created by 2010. But the tax incentives that have driven
this growth of renewable energy are poised to expire once
again.
In recent years when these tax incentives have been allowed
to lapse, the impact has been dramatic. For example, new wind
installation dropped between 77 and 93 percent each of the
three times that the production tax credit expired since 2000.
If we do not provide certainty to investors by extending these
tax incentives early this year, we are likely to see the recent
growth of renewable energy grind to a halt.
Our economy and our planet cannot afford it. If the tax
credits for solar and wind expire this year, it will lead to an
estimated $19 billion in lost investments, and 116,000 lost job
opportunities through 2009.
Last week, the House passed legislation that would repeal
unnecessary tax breaks for the largest oil companies and use
those funds to extend those vital tax incentives for wind,
solar and other renewable technologies. But rather than join
the overwhelming bipartisan majority supporting this bill that
would begin to restore the long-term health of our economy and
our planet, the Bush administration is continuing to stand with
Big Oil in opposition.
In April of 2005, President Bush said, quote, ``with 55
dollar a barrel oil, we don't need incentives for oil and gas
companies to explore.'' Well, now, with that price nearly
double, our economy on the brink of recession and our planet's
thermometer rising, it is time for this administration to
finally back up its rhetoric and support incentives for wind
and other renewables that will reduce global warming pollution,
not make it worse; create jobs rather than hurt consumers; and
turn our economy green rather than push it deeper into the red.
And now I would like to turn and recognize the Ranking
Member of the Select Committee, the gentleman from Wisconsin,
Mr. Sensenbrenner.
[The prepared statement of Mr. Markey follows:]
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Mr. Sensenbrenner. Thank you very much, Mr. Chairman. As
I've said many times, promoting and advancing technology must
be a key part of any global warming or energy security policy,
and I am pleased that the chairman has scheduled this hearing
today on renewable energy technology. This week people came to
Washington from all over the world to talk about renewable
energy.
President Bush addressed the Washington International
Renewable Energy Conference yesterday, not to mention the
scores of other government and business leaders who were here
to examine the future of worldwide renewable energy production.
The reason that everybody's talking about renewable energy
production is because its future role is a vital part of the
world's economy.
Traditional fossil fuels are and will remain a key source
of worldwide energy production, but just like a strong
investment portfolio that includes a diverse group of stocks
and bonds, future energy portfolios should include a diverse
array of energy technologies, including fossil fuels, renewable
energy and nuclear power. On that point I am happy that the
chairman has also scheduled a hearing for next week on nuclear
energy technology. Nuclear power is safe, clean and produces no
greenhouse gases. It, too, must be part of a diverse energy
portfolio.
But diversity is the key. When it comes to energy security
or environment protection, different energy technologies work
better in different places. Each has its benefits and each has
its drawbacks. For example, wind energy is a promising source
of clean, renewable power. But the wind doesn't blow
consistently and some areas are better for wind power than
others.
As Interior Secretary Dirk Kempthorne noted at the
conference yesterday, wind farms can hurt bird populations,
some of which are already under stress. The Audubon Society has
noted that the average population of common birds has declined
70 percent since 1967. So placing wind farms in places that
will harm bird operations, bird populations, does not advance
the cause of renewable energy, Secretary Kempthorne said, and I
agree.
In the right places, wind farms will be a great source of
renewable energy, but the shoe doesn't fit every footprint.
Likewise, solar power is a great resource but mostly in areas
where large tracts of land are available for use and the sun
shines consistently. These should be just two options in a
diverse energy portfolio.
The Energy Information Administration recently reported to
the Senate its projections for future energy production, and
the use of renewables in the U.S. will nearly double by 2030.
But even then, renewable energy won't produce as much
electricity as nuclear power currently does. The nuclear power
only accounts for about 20 percent of the nation's electricity
production. That's why maintaining diverse energy resources is
a top priority.
By focusing on energy technologies like renewables and
nuclear, combined with energy efficiency, the U.S. can meet
many of the principles I believe are vital for any global
warming policy. These technologies can help produce verifiable
environmental benefits, and development of these technologies
can help create jobs and improve the economy, which everybody
agrees is a good thing.
I thank the witnesses for coming to enlighten us about the
status of these technologies. I look forward to hearing more
about them and yield back the balance of my time.
The Chairman. The gentleman's time has expired. The chair
recognizes the gentleman from Oregon, Mr. Blumenauer.
Mr. Blumenauer. Thank you, Mr. Chairman. In 319 days, the
United States will begin a new era where we will, no matter who
is elected president--Mr. McCain, Ms. Clinton, Mr. Obama--we
will have a Federal Government that is no longer resisting
working with the rest of the world on issues of climate change
and global warming, and there's strong signals that we will be
moving more aggressively into a carbon-constrained economy.
There are those that talk about the future. I think our
witnesses here today will demonstrate that that era is here
now, in terms of not just the promise of renewable energy but
its practice. And I had a chance to review some of the
testimony. I'm familiar with some of what's going on. I think
this is an important statement about where we are.
It is interesting that the era is here. The Federal
Government needs to catch up. The Federal Government can learn
from some of our witnesses about how to be a more sophisticated
customer for energy. The Federal Government, as the largest
consumer of energy in the world, has an opportunity to change
dramatically, not just our carbon footprint, but bring many of
these things to scale. We need to have a broad policy framework
like a renewable portfolio standard that would help accelerate
this in a way that enhances the market.
Last but not least, we need to realign our massive array of
tax subsidies. The production tax credit you've referenced will
be extended this year. It's outrageous that it has taken this
long, and it is not something that is done on a multiyear basis
rather than guessing year to year. We clearly do not need to
give as much of a subsidy to the large oil companies that have
found a way to make a profit, but there are some industries and
technologies that are here today where a little bit of federal
assistance could make a big difference with a fraction of that
money.
I look forward to the hearing and appreciate your arraying
it in this way.
The Chairman. I thank the gentleman. The gentleman's time
has expired. The chair recognizes the gentleman from Arizona,
Mr. Shadegg.
Mr. Shadegg. Mr. Chairman, thank you very much for holding
this hearing. I would like to start by welcoming a very
important witness here today, Ms. Barbara Lockwood, who is the
manager of Renewable Energy at Arizona Public Service Company.
Barbara is here to talk about a new project that I'm very proud
of that Arizona Public Service Company has just announced. It
is the construction of the largest solar power plant in the
world in my home state of Arizona. Barbara, thank you for being
here.
I can't pass up this opportunity to tout the advertising
campaign that is making Arizonans aware of this project. They
take a weatherman--he's not a real weatherman--put him on
camera and say, you know, here's the forecast for the next
three days. Sunny, hot. Sunny, sunny, sunny, hot. Next week
it'll be sunny, hot, sunny, sunny, hot. And in June, it will be
sunny, hot, sunny. If you're getting married in August,
however, it'll rain. He pauses and says, no, just kidding.
It'll be sunny and hot.
The Arizona people are embracing that campaign, and I am
very excited about this project. I want to compliment Arizona
Public Service. Obviously, technology is a part of the path
forward. Solar energy needs to be a part of the path forward.
And Arizona is emblematic of this entire issue, because in
Arizona we have tremendous growth. The state is the second
fastest growing in the nation. The city in which I live and
represent is one of the fastest growing in the nation, and I am
thrilled that we are moving forward both with technology in
every area, but also particularly with technology in
renewables.
In that vein, I'd like to point out something that has
become at least a little bit of a trademark of my own, Mr.
Chairman. I know yours is brilliantly funny opening statements.
You may recall that years ago we did a hearing on renewables in
the Commerce Committee, and I brought in the hydrologic cycle.
And I want to point out, I took it out of a third grade text or
a fifth grade text.
We were discussing at that time the issue of renewable
energy, and in that particular piece of legislation, hydro was
not considered renewable energy. And so I brought--I went to
one of my staffers whose wife taught grade school, and I said
does she happen to have a copy of the hydrologic cycle in a
textbook? And they said, sure. Let's see if we can find one.
And they found this one. And of course it shows, you know, rain
evaporating up out of the ocean, coming into the clouds, the
clouds move over the land and then come back down.
I would argue that we need to focus on the fact that
hydropower needs to be an important part of this entire
discussion. It is one of the single most efficient forms of
renewable energy. Ninety percent of the available energy from a
hydro power plant can be converted into electricity. It is
emissions free, Mr. Chairman, so it addresses the issue of a
carbon footprint. And I would urge my colleagues here as they
look at renewable energy to focus on that.
There are new possibilities of in-stream flow. In the old
days when we thought about hydropower we thought about you have
to build a dam and put a turbine in the dam and then let the
water out of the dam, and there are environmental consequences.
We've actually gotten better since then. We can now do in-
stream flow.
I just want to conclude with one fact. Today in Arizona,
Glen Canyon Dam is producing one-third less power than it is
capable of because of environmental damage downstream. That is
the equivalent of two coal or natural gas-powered plants and
their carbon footprint. If we were more innovative, if we used
technology to a greater degree, we could create a second
downstream--downstream, a second dam, operate that solely for
environmental purposes, operate Glen Canyon Dam for
hydroelectricity purposes, and eliminate the need for those two
coal-fired plants.
I thank you, Mr. Chairman. I regrettably have another
hearing that I'll have to attend and will miss part of this
hearing, but I commend you for holding it. And, again, I
commend Arizona Public Service Ms. Lockwood for her testimony.
The Chairman. The gentleman's time has expired. The chair
recognizes the gentlelady from California, Ms. Solis.
Ms. Solis. Thank you, Mr. Chairman, and thank the witnesses
for being here this morning as well. I, too, have another
conflicting hearing that I'll have to leave to attend to. But I
just wanted to touch on the economic crisis that we're facing
across the country, but particularly in areas like mine.
We just heard from the Department of Labor in their recent
reports that we've lost about 17,000 jobs in January. In my
district, in East Los Angeles and Southern California,
unemployment has reached above 7.2 percent, and we still don't
have an accurate figure for a lot of our youth that have also
been unemployed.
We've seen high levels of poverty, homelessness, and the
last thing that people want to talk about is going to the
gasoline station and having to fill up and putting in more than
$50 to fill up half a tank. The prices there are outrageous,
above $3.60 per gallon.
A recent report that we know in the American Solar Energy
Society estimated back in 2006 that renewable energy and the
energy sector generated, however, 8.5 million jobs, nearly a
trillion dollars in revenue to the United States. And jobs in
these sectors, as we know, provide livable wages, above the
minimum wage, and in many cases will not be outsourced. They
will be jobs that can stay here on our shores.
In this time of economic turbulence, it's important that we
support those sectors of our economy that are providing that
incentive. And I'm proud that last week the House passed the
Renewable Energy and Energy Conservation Tax Act. I heard
personally from many of our medium and small-sized businesses
in Los Angeles at a recent event I held at the East LA Skill
Center where we're finding that individuals are getting
involved in training segments of our society that would
otherwise not have an opportunity to get involved in placement
and development of solar panels.
And there were many people there as businesses that were
pleading with me, ``Congresswoman, when is the Federal
Government going to provide relief so we can provide the kinds
of funds, the capital investment so that we can prolong these
kinds of jobs?'' My answer to them is I will do whatever I can
as a part of--a Member of Congress here and that serves on this
committee, but also ask them to also talk to our President and
to the other side of the aisle. Because indeed, this is
something that affects all of us.
I look forward to hearing from you. I know that we have a
lot to do. Green collar jobs is an area that I've been working
on. The President did sign a bill that would allow for $125
billion to be spent to create at least at a minimum 3 million
jobs. Again, those jobs are very important to us. Help us.
Let's step up to the plate. And I look forward to hearing from
each and every one of you. Thank you.
The Chairman. The gentlelady's time has expired. The chair
recognizes the gentleman from Missouri, Mr. Cleaver.
Mr. Cleaver. Thank you, Mr. Chairman, and thank you for the
hearing. I would like to express appreciation to our august
panel today. Let me apologize in advance. I'm going to be
running in and out. I'm on the Financial Services Committee,
which is right around the corner, and it starts at ten, so I'll
be shuttling in between.
But I appreciate your presence here and I appreciate the
fact that we are dealing with this energy, renewable energies
issue, and the need to create green jobs. As the Federal
Government becomes more and more sensitive, and I think Mr.
Blumenauer is absolutely right--it doesn't matter who the
president is. We're going to move deeper necessarily into the
world that is becoming green-conscious. And we are going to
need to create green jobs.
The committee I'm on, which also deals with housing and
oversight for the Department of Housing and Urban Development,
we are now requiring that all new HUD housing contain or be
built with architects--by architects who create green houses.
And I think you're going to see more and more legislation
containing components that will require the greening of however
we are spending our federal dollars. And so if we're going to
do that, it seems to me that we need to create people who can
handle those jobs, people who can put in solar panels.
I live in a city, one of the largest cities geographically
in the country, 322 square miles with more circumferential
highways than any other city per capita in the United States.
We have one E-85 service station in that large area. And I'm
told I drive an E-85 car that we are going to have a shortage
of mechanics, for example, who can work on hybrids and E-85
vehicles. And so we are going to move into this new era, and
unless we make preparations now, we're not going to have the
workers who are going to be able to do the jobs to sustain the
era we're trying to create.
And so, hopefully, you will be able to help provide us with
some direction today that we might be able to use as we further
sensitize Congress and the nation on the necessary changes that
we've got to make as a nation.
I yield back the balance of my time.
[The prepared statement of Mr. Cleaver follows:]
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The Chairman. Great. The gentleman's time has expired, and
all time for opening statements by members of the Select
Committee has expired, but we see that we have a guest here,
Eliot Engel, a congressman from New York, and would the
gentleman like to be recognized?
Mr. Engel. Yes. Thank you. Thank you very much, Mr.
Chairman. I'll be very brief. And thank you for letting me
participate. And this is obviously very important. I look
forward to hearing all the witnesses this morning, especially
my friend Bianca Jagger, chair of the World Future Council.
Bianca has fought for many years for human rights as a human
rights activist, and in many ways, we're talking about human
rights. Because if we do what we're supposed to do with
renewable energy, it's certainly a win for everybody.
I was looking at the notes that were passed out, Mr.
Chairman, and one of the things that caught my eye is renewable
energy tends to have higher construction and maintenance cost
and lower or zero fuel cost, while fossil energy has the
reverse cost structure. As a result, renewable energy
technologies lead to a higher number of jobs per unit of energy
generated compared to conventional fossil fuels. The
construction, manufacturing, installation, operation and
maintenance jobs produced by a megawatt of photovoltaic solar,
for example, is 7 to 11 times greater than the number of jobs
generated by an equivalent amount of coal or gas-generated
electricity. So we're talking about clean air. We're talking
about helping with global warming, and we're talking about
creating new jobs and driving economic growth. It's certainly
in my opinion the direction that our country should go in. We
ignore global warming obviously at our own peril, and I believe
that tax incentives for renewable energy is certainly the way
to go. And I'm glad, as Ms. Solis said, that last week we
passed a bill giving tax incentives, Renewable Energy and the
Energy Tax Act. I really believe only government can drive
this, and that's why this hearing this morning is so important.
So I thank you for letting me participate, and I am eagerly
awaiting the testimony of our witnesses. Thank you, Mr.
Chairman.
The Chairman. Thank you, and we welcome you, sir, to this
hearing. And that completes the opening statements.
We'll now turn to our very distinguished witnesses, and our
first one is Mr. Vic Abate, who is the Vice President for
Renewable Energy from General Electric. This has been an
incredible growth story. We're looking forward to hearing more
about it. You have five minutes, Mr. Abate, whenever you are
ready.
STATEMENT OF VIC ABATE, VICE PRESIDENT, RENEWABLE ENERGY,
GENERAL ELECTRIC
Mr. Abate. Thank you, Mr. Chairman and members of the
committee. I appreciate this opportunity to testify on
renewable energy, the economy, its potential to stimulate
investment and job creation, and the critical importance of
government policy in realizing this potential.
GE Energy is a power generation technology leader with more
than 100 years of industry experience. Our global team consists
of 36,000 employees. We operate in over 700 sites and in more
than 100 countries. Our power generation business is a diverse
portfolio consisting of thermal, gasification, nuclear and
renewable energy technologies such as wind, solar and biomass.
With energy demand increasing dramatically and growing
worldwide pressure to address greenhouse gas emissions, GE
believes firmly that renewable energy must become an integral
part of the 21st century energy mix. Supportive government
policy has enabled the U.S. to become the global leader in new
wind power installations. Last year the U.S. added over 5,000
megawatts, over 25 percent of the world's total wind power, and
that's up from 55 megawatts a decade ago, so tremendous growth.
The U.S. installed over 45 percent--the installed base grew
over 45 percent and now totals 16.8 gigawatts in 34 states and
accounts for over 1 percent of the nation's electricity supply
and powers over 4.5 million homes from this resource. Wind
power accounted for 30 percent of all nameplate generation
capacity added in the United States last year, second only to
natural gas, and the U.S. is on pace to surpass Germany and
become the nation with the largest installed base of wind power
by the end of 2009.
The growth in wind energy is creating real economic energy
security and environment benefits. According to the American
Wind Energy Association, last year the industry spurred $9
billion in investment and created more than 50,000 new jobs.
Much of this job growth has occurred in areas that have been
hardest hit by manufacturing job losses. The installed base for
wind power also displaces 3 percent of the natural gas
consumption and avoids the emissions of 28 million tons of
carbon dioxide from traditional power plants, the equivalent of
taking 6 million cars off the road.
Policy-driven growth of the wind industry in the U.S. has
helped GE expand its wind business revenues from less than $1
billion in 2004 to more than $6 billion this year. Over 8,000
of GE's 1.5 megawatt wind turbines have been installed
worldwide, a number expected to exceed 10,000 by the end of
this year.
Since entering the wind industry in 2002, GE has invested
over $700 million in technology, increasing its wind turbine
production six-fold and tripled its U.S. wind turbine assembly
sites. We've expanded capacity from about 10 wind turbines per
week to making 13 a day, and we've grown renewable energy jobs
at GE to more than 2,700.
GE has also tripled the number of its suppliers, who now
account for in excess of 2,000 U.S. jobs and cover 15 states.
We see significant future job creation potential from wind
energy and estimate that sustaining the growth rate we've seen
over the past five years for the next five would triple the
size of the industry and of the associated jobs.
To realize the potential for wind power we must meet three
challenges: Technology, supply chain and policy. The cost of
wind electricity has dropped 80 percent over the past 20 years,
and GE's technology investments in efficiency, reliability and
grid integration will continue to improve the competitiveness
of wind power. GE is also driving supplier quality in wind
industry through its Lean Manufacturing and Six Sigma
processes.
The most critical challenge facing the U.S. wind industry
is policy uncertainty. Long-term stable, predictable incentives
reward innovation and enable technology manufactures and
suppliers to invest and expand capacity to keep up with the
growing demand. The current growth of the U.S. wind market is
underpinned by the repeated extensions in 2005 and 2006 of the
federal production tax credit that's set to expire at the end
of 2008. Expiration of the tax credit would have a devastating
impact on the domestic wind industry. Prior expirations at the
end of 1999, 2001 and 2003 reduced wind power installations in
the following year by 73 to 93 percent. A report estimates that
failure to extend the credit this year would cause a 90 percent
drop in wind installations, resulting in $11.5 billion lost
investment and 76,000 job opportunities in 17 states in 2009
alone. Jobs that might have been created in the United States
could shift instead to overseas areas like Europe and China,
which are strengthening their wind policies.
In summary, GE believes that the United States is well
positioned to benefit from the growth of the renewable energy
industry. However, continued growth of this industry is
dependent on stable, predictable policy. We urge the U.S.
Congress to act immediately and extend the exiting production
tax credit for wind energy.
Thank you for this opportunity to present this testimony,
and I look forward to your questions.
[The prepared statement of Mr. Vic Abate follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Mr. Abate, very much.
Our second witness is the Senior Director for Solar Markets
and Public Policy for Applied Materials, Mr. Blair Swezey.
Whenever you're ready, sir, please begin.
STATEMENT OF BLAIR SWEZEY, SENIOR DIRECTOR, SOLAR MARKETS AND
PUBLIC POLICY, APPLIED MATERIALS
Mr. Swezey. Thank you, Mr. Chairman, and members of the
committee.
The Chairman. Could you turn on your microphone, please?
Mr. Swezey. Oh, I'm sorry. Thank you, Mr. Chairman, and
members of the committee, for providing us with the opportunity
to testify today. We are very pleased to present our corporate
perspective on the potential of the solar industry to create
domestic jobs while at the same time providing an important
solution to some of our most pressing energy and environment
needs.
Applied Materials is a Fortune 500 company headquartered in
Silicon Valley that employs approximately 14,500 workers
worldwide, including nearly 8,000 here in the United States,
with additional production facilities--I'm sorry. Our primary
manufacturing facilities are in Austin, Texas, with additional
facilities in Germany and Israel. We sell more than 80 percent
of our products outside the United States, making us an
important positive contributor to the U.S. balance of trade.
We recently celebrated our 40th year as a company and have
a proud heritage of providing productivity-enhancing
nanomanufacturing tools and equipment to the semiconductor and
flat-panel display industries. We have now extended this
technology and manufacturing expertise to providing the tools
for production of solar electric photovoltaic or PV modules.
We see considerable growth potential in the rapidly
expanding solar market. Our technology and production scale
helped reduce the cost of transistors by a factor of 20 million
between 1974 and today. Similarly, the price of flat panel
displays has dropped by a factor of 20 in the past decade.
We fully expect to have the same impact on driving cost
reductions for PV panel production by a factor of two to three,
which will put solar electricity prices on par with grid power
prices for large areas of the world. The key is getting to
large-scale manufacturing by creating large markets.
The sheer magnitude of our energy supply challenges--
meeting continued global demand growth while assuring economic
prosperity, domestic energy security, and environmental
quality--dictates that we accelerate the development of all
available energy resource options. The question is not one of
renewable resource availability, but of the economics of
deploying the technologies to exploit these resources and how
rapidly industry can ramp up the manufacturing capacity to
produce the technologies.
First to economics. Electricity generation from
photovoltaics is currently anywhere from two to three times
more expensive than electricity generation from conventional
sources. Nevertheless, global PV production has been growing at
a rapid clip, rising at a rate of more than 40 percent per year
over the past decade. This growth is a direct result of
governmental policies that have been established here in the
United States and around the globe.
In the U.S., the Energy Policy Act of 2005 established a 30
percent investment tax credit, or ITC, for residential solar
installations and raised the existing business energy ITC from
10 percent to 30 percent. A reduction in the credit would
absolutely send the wrong signal to the investment community
that is so critical in providing the capital for solar industry
expansion. And so we commend the House of Representatives for
its recent action in passing H.R. 5351, which includes
extension of these tax credits and other important changes.
The other key element is domestic jobs and economic
development. The solar industry creates manufacturing jobs with
labor that is readily transferrable from other manufacturing
industries. The United States is already a base for solar panel
manufacturers and dozens of new startup operations. Applied
Materials itself now employs about 900 employees in its Energy
and Environmental Solutions group, which is just two-and-a-half
years old.
While overall U.S. manufacturing job numbers continue to
decline, renewable energy industries offer a whole new
generation of manufacturing job potential. However, the fact
that companies develop the technology here in the United States
does not guarantee that they will also locate the production
here in the United States. Achieving the job creation potential
of the solar industry depends on continuing policy support to
build the market.
The Solar Energy Industries Association, of which Applied
Materials is a member, estimates that extending the current set
of federal solar tax credits will create 55,000 new jobs in the
solar industry and more than $45 billion in economic
investment. Conversely, a recent study by Navigant Consulting
estimated that failure to extend the credits will cost the
country nearly 40,000 jobs and more than $8 billion of
investment just through 2009.
Industry will locate where production conditions are most
favorable, and manufacturers are also likely to invest and
locate close to where viable end markets exist. However,
companies need to see a clear market growth pathway to commit
the substantial resources needed to ramp production capacity
and output.
Unfortunately, in the case of PV manufacturing, many U.S.
companies are increasingly looking abroad to expand their
production, in part because of the uncertainty over future
policy support. Speaking from our own corporate experience, 100
percent of our solar factory orders have come from outside the
United States. So while our domestic business is advancing, the
opportunity for a much larger U.S. industry platform is idle.
In summary, the PV industry is currently transitioning from
one of component assembly operations to large scale
manufacturing, which will dramatically increase the scale and
throughput of PV module production in coming years. Solar
photovoltaics is following a well documented pattern of cost
decline, and with new technology approaches, is poised to
create an accelerated cost reduction path. With our abundance
of solar and other renewable energy resources, we are presented
with the opportunity to manufacture our way toward domestic
energy security and sustainability.
As a nation, we need to seize this opportunity. Applied
Materials will do its part to make America competitive in this
important and growing industry, and we stand ready to work with
policymakers to develop a sound policy framework that will
enable us and other innovative U.S. companies to lead the way.
This concludes my prepared remarks, and I look forward to
your questions. Thank you again for the opportunity to speak
before you today.
[The prepared statement of Mr. Blair Swezey follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you Mr. Swezey.
Our next witness is Mr. Bill Unger from the Mayfield Fund,
and he is here representing Environmental Entrepreneurs. We
welcome you, sir.
STATEMENT OF BILL UNGER, PARTNER EMERITUS, MAYFIELD FUND,
ENVIRONMENTAL ENTREPRENEURS (E2)
Mr. Unger. Thank you. I'm a Partner Emeritus at Mayfield
Fund. We're a venture partnership.
The Chairman. Could you move that microphone up a little
bit closer, please.
Mr. Unger. Okay. I'm part of a venture partnership that's
invested in technology companies since 1970. I'm also a member
of Environmental Entrepreneurs, which is an organization, a
volunteer organization of 800 members across 25 states who
believe that good environmental policy is good economic policy.
I'd like to thank the chairman and members of this
committee and the House for their work in passing the Renewable
Energy and Energy Conservation Tax Act. The extension of these
incentives that provides an even playing field for all
technologies is vital for our nation. We also hope that the
Senate and the President will cooperate and pass this into law.
It's a critical step to solving our urgent and intimately
related problems of dependence on foreign energy, our economic
growth and climate change.
For example, today, each ten gallon fill-up at the pump has
been calculated as adding an additional $2.10 to as much as $11
per gallon when the full cost of the tax incentives, the $50
billion cost for protecting shipping lanes of oil, and health
and environmental costs are fully loaded. And this is exclusive
of the cost of the war. We add these dollars to our debt or pay
in other ways to the tune of an additional $20 to $100 per
tankful that is not evident at that particular point. Also,
since the Energy Policy Act of 2005 was passed, which granted
$6 billion of incentives to the oil industry, the oil industry
has spent $112 billion repurchasing their shares on the open
market. We would like to see a more even playing field.
I appreciate this opportunity to discuss with you the
benefits of investment in clean tech jobs, economic growth and
an improved environment. The need to address climate change is
immediate. Because of the magnitude of this challenge, this new
industrial revolution, properly addressed, could create more
jobs, more economic prosperity, more personal investor,
corporate and public servant satisfaction than has ever been
seen for any number of the exciting technological innovations
of the past.
The venture industry is proud of its role in job creation
and bringing new technologies to market. In 2006, venture-
backed companies provided 10.4 million U.S. jobs, and these
companies had revenues of $2.3 trillion, and we are excited
about Cleantech. The analysis it sounds like most of you are
familiar with from UC Berkeley concludes, ``the renewable
energy sector generates more jobs whether it's measured on per
megawatt of power installed per unit of energy produced, or per
dollar of investment than the fossil-fuel-based energy
sector.'' E2 estimates U.S. cleantech investment by 2010 will
be $14 billion to $19 billion and will create an additional
400,000 to 600,000 jobs.
This is a big opportunity. How does it start? Often with
the wealth of technologies generated at our own national
laboratories and our universities. These are national
resources. Really they're our treasures. DARPA and NIH play a
crucial role nurturing technology development until the venture
industry, which invests in product development, becomes
interested. Our tax dollars paid for much of the pioneering
work in solar and wind technology at our national labs. Much of
the basic work for the hybrid engines on the road today was
done at Stanford University, yet we are not the leaders in
these fields. Germany, Denmark, Taiwan and Japan seized these
opportunities and are prospering.
Since the energy crisis of the '70s, federal energy
research spending is down significantly. And is this important?
The market caps of Ford and General Motors are $13 billion
each, and they're encouraging their employees to find other
work. Toyota has a $176 billion market cap, and they have
record employment. With an even playing field in terms of
policy and federally funded R& D in a variety of technologies,
we can regain market leadership. The semiconductor industry in
the 1980s regained world leadership from exactly this kind of
public-private partnership.
There's a high degree of technical knowledge spillover from
the semiconductor and software industries to cleantech. Many of
the entrepreneurs from these fields are now entering the
cleantech industry. Their experience is an unmatched resource
in the world. So this is a great story. Cleantech investors
love it. In 2006, $2.9 billion was invested in cleantech, 76
percent increase over the previous year. Cleantech is now the
third largest venture investment segment. The barriers that
keep cleantech from growing fast enough to head off the climate
crisis are inconsistent policy, long-term subsidies for
conventional industries and trade barriers. These have to be
corrected.
A mandatory, comprehensive national cap on greenhouse gas
emissions, a national renewable energy standard and increased
R&D funding are necessary. But these measures should not
preempt states from going even further if they so choose. The
Manhattan Project, the Marshall Plan, the space program,
Roosevelt's rural electrification program and Eisenhower's
interstate highway system are all examples of strong and
visionary federal leadership. And unlike the Apollo program and
the Manhattan Project, we can do this with existing
technologies. We need to be the people the world have been
waiting for. We need to be the people our children will say
made the right decisions to give their children a safer,
healthier and more prosperous place to live.
I look forward to your questions.
[The prepared statement of Mr. Bill Unger follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Great. We thank you, sir, very much. Our next
witness is Ms. Barbara Lockwood, who is the manager of
Renewable Energy for the Arizona Public Service Company.
Welcome.
STATEMENT OF BARBARA D. LOCKWOOD, P.E., MANAGER, RENEWABLE
ENERGY, ARIZONA PUBLIC SERVICE COMPANY
Ms. Lockwood. Thank you. Mr. Chairman and members of the
committee, thank you for the opportunity to provide APS's
perspective on the economic benefits of renewable energy. As
Congressman Shadegg mentioned, Arizona is the second fastest
growing state in the country, growing at three times the
national average. APS has more than a million customers who at
their peak consume over 7,000 megawatts of electricity. And
that electricity demand is growing at a rate of hundreds of
megawatts each and every year.
In Arizona, our most abundant renewable resource is
sunshine. And APS is looking for ways to put the sun to work
providing electricity. APS is committed to making Arizona the
solar capital of the world.
The focus of my comments today are on a particular type of
solar technology called concentrating solar power, or CSP,
which is different than the photovoltaic systems or solar
panels that you typically hear about. APS recently announced
the Solana Generating Station. Solana is a 280 megawatt solar
power plant to be located just outside of Phoenix, Arizona. APS
has signed a long-term contract with Abengoa Solar, the project
developer and owner, for all of the electricity generated by
this plant.
If operating today, Solana would be the largest solar power
plant in the world. The plant will use nearly three square
miles of parabolic trough mirrors, and operating at full
capacity, the plant will provide enough electricity for 70,000
homes. One of the most important aspects of this technology is
its ability to capture and store energy for later use. By using
large insulated tanks filled with molten salt, heat captured
during the day can be stored and used to produce electricity
when the sun is no longer shining.
The value of this can't be underestimated. Because it can
provide energy even after the sun has set, this technology
provides the maximum value, and it also provides reliability
for APS and its customers. Solana also provides significant
economic benefits to the state of Arizona. The Solana
Generating Station will provide 1,500 construction jobs and 85
permanent operations jobs. But that's not the total economic
impact. All totaled, Solana will result in over a billion
dollars in economic development for the state of Arizona.
Today the single biggest obstacle to the success of Solana
is the potential expiration of the 30 percent federal
investment tax credit. Without this tax credit, Solana is
simply not affordable today. I also need to be clear that a one
or two-year extension of the ITC is not sufficient. While it
might not be preferable, it is usually acceptable for small
scale solar projects and for wind projects. But large scale
solar is different. It takes about three to four years to
permit and construct a plant like Solana, and we can't begin
building it until we know when it's finished it's going to be
eligible for the 30 percent investment tax credit. If a long-
term extension of the investment tax credit is not granted,
Solana will not be built.
If the ITC is extended for a sufficient period of time,
there will be many more plants like Solana in Arizona and in
the desert Southwest developed in the next five to ten years.
If not, the industry will lose its momentum and no large scale
solar plants will be built. The future of large scale solar
depends on getting those first few plants into operation.
Thank you, Mr. Chairman and members of the committee for
the opportunity to share this information with you.
[The prepared statement of Ms. Barbara D. Lockwood
follows:]
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The Chairman. Thank you, Ms. Lockwood, very much. Our next
witness is Ms. Bianca Jagger, who is the Chair of the World
Future Council. Welcome. Could you move the microphone up a
little bit closer and turn it on.
STATEMENT OF BIANCA JAGGER, CHAIR, THE WORLD FUTURE COUNCIL
Ms. Jagger. Thank you, Mr. Chairman, and thank you for
organizing this very important hearing. It is an honor and a
privilege to be here. I have heard some very important
testimony about renewable energy and what has been done in the
United States. Perhaps I'd like to talk about the threat of
global climate disaster that is no longer out for debate, and
therefore, renewable energy becomes a must and not just a
question mark. The majority of scientists are in agreement.
Governments have previously been reluctant to accept this
reality. However, notwithstanding all this sobering
information, the agreements reached in Bali were extremely weak
and inadequate. And as you know, the role that the United
States played in Bali was not the most encouraging.
Climate change is the defining challenge of our age. How to
meet that challenge while dealing with the already devastating
consequences of floods, droughts and rising temperatures remain
the great unanswered question, and the time to answer is
running out. In its final report, the United Nations
Intergovernmental Panel on Climate Change stated that the world
must reverse the growth of greenhouse gas emissions by 2015 to
avert a global climate disaster. If there is no action before
2012, that's too late, said Rajendra Pachauri, who headed the
panel, which shared the Nobel Peace Prize in October with
former U.S. President Al Gore. What we do in the next two to
three years will depend and will determine our future.
But what should we do? I used to believe that reduced
energy consumption was an important first step, accompanied by
research and investment into energy efficiency and renewable
energy sources. I used to believe that it would be enough to
encourage more localized lifestyle, reducing the need for
overburdened, polluting transport networks. But after reading
the most recent scientific findings, I have come to realize
that even if we begin each of these practices in earnest
tomorrow, it is simply not enough.
The time has come to expose the myth that we can avert
climate catastrophe by small measures and sticky plaster
measures. In the recent assessment by the highly respected
climate scientist James Hansen of the NASA Goddard Institute
for Space Studies, he suggested that the IPCC report, itself
alarming reading, might even be ``absurdly optimistic.''
For example, the often-touted ``safe'' figure of 3.6
degrees Fahrenheit increase in average global temperatures is
in fact not safe at all. We have already experienced a rise of
1.31 Fahrenheit in average global temperatures. A rise of 3.6
Fahrenheit is three times that. Agreeing to a 3.6 Fahrenheit
target does not avoid the possibility of catastrophe. On top of
this, the apparently bold target of reducing emissions by 50
percent does not guarantee that the temperature increase will
be limited to 3.6 degrees Fahrenheit.
Hansen estimates sea level rises of 4 to 5 meters this
century due to melting ice in Greenland and Antarctica. He
describes how the IPCC report fails to take geological records
into account and ignores the so-called ``albedo flip'' property
of water: ``The `albedo flip' property of ice/water provides a
powerful trigger mechanism . . . a climate forcing that `flips'
the albedo of a sufficient portion of an ice sheet can spark a
cataclysm.''
Hansen is telling us that the poles do not melt in a linear
fashion, but rather in bursts, and that if the globe warms up
just a few degrees, it might be enough to trigger a
catastrophic ice sheet collapse. Such a collapse would not only
drown most of the world's centers of population, but would
itself fuel further climate change, since less ice means less
heat reflected back into space.
``The Earth's climate is remarkably sensitive to global
forcings. Positive and `amplifying' feedbacks predominate. This
allows the entire planet to be whipsawed between climate
states. Recent greenhouse gas emissions place the Earth
perilously close to dramatic climate change that could run out
of control.''
``If we go beyond the point where human intervention can no
longer stabilize the system, then we precipitate unstoppable
runaway climate change. That will set in motion a major
extinction event comparable to the five other extinction crises
that the Earth has previously experienced.''
This clearly demonstrates what the World Future Council,
the organization I chair, is advocating. If we are serious
about averting climate change catastrophe, we must think in
revolutionary terms, and transform our way of life, restoring
rather than destroying life on Earth. We must embark upon a
global renewable energy revolution. If we are to achieve the
necessary carbon reduction by 2020, we must replace our carbon-
driven economy with a renewable energy economy. There is no
time to debate half-measures any longer. The period in which
they may have been effective has long been passed.
We have experienced an industrial revolution. We have
experienced a technological revolution. It will take a global
renewable energy revolution, similar in scale and consequence
to those two, to avert catastrophe. As Hermann Scheer, a member
of the German Bundestag and the World Future Council, said,
``This cannot be achieved with the method of `talk globally--
postpone nationally,' but only with the method of `think
globally--act locally, regionally and nationally.' ''
The beginning of this movement may already be underway.
Some nations have begun to act, even finding great financial
opportunities along the way. In Germany, pushes toward energy
efficiency and renewable energy sources are spurring the
economy. By 2020, every building must meet high levels of
energy efficiency. The Feed-In tariffs legislation, which
guarantees a preferential price for energy produced, will
create 250,000 jobs.
The Chairman. Ms. Jagger, could you please summarize the
statement?
Ms. Jagger. Sure. It will be crucially important for the
United States, perhaps led by individual states, to adopt Feed-
In tariffs as a significant way by which to accelerate the
introduction of renewable energy. The U.S. cannot continue to
rely on powering its cities, its industries, its farms and its
transport systems, by energy resources for which there is ever
greater global competition.
Thank you very much, Mr. Chairman.
[The prepared statement of Ms. Bianca Jagger follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Great. Thank you, Ms. Jagger, very much.
And our final witness is Mr. Tom Buis, who is the President
of the National Farmers Union. Welcome, sir.
STATEMENT OF TOM BUIS, PRESIDENT,
NATIONAL FARMERS UNION
Mr. Buis. Thank you, Mr. Chairman and members of the
committee. I am President of the National Farmers Union. We're
106 years old and represent a quarter million family farms and
ranches around the country.
We're here to say to you, Mr. Chairman, and the members of
the committee that rural America is ready, willing and able to
do its part to help our nation solve probably our biggest
economic, national security and environment challenge that
we've ever faced. We have some experience in renewable energy
over the past three decades after the first oil embargo in the
early '70s. A lot of people started talking about renewable
energy and what we could do.
We started out with a product called ``gasohol.'' It wasn't
very efficient both economically or energy-wise, but it took
about 30 years worth of investment in technology in the
industry, mostly by farmers, mostly by local people. And we
really didn't cross that threshold until the Federal Government
stepped in with a renewable fuel standard, with a mandate which
gave us certainty for a marketplace.
We would hope that the same would happen in all types of
renewable energy. We think a renewable portfolio standard is
past due. Last year, we did a study on the potential benefits
to rural America and our nation if you adopted a 20 percent
renewable portfolio standard for renewable electricity
generation. And the production of electricity from wind alone
would result in about a half a billion dollars in payments to
farmers in leases. Production electricity from renewable
biomass would result in about $25 billion to farmers growing
these new crops, and $43.5 to $66 billion in capital would be
invested in these new clean energy facilities in rural America.
The types of projects developed also play a critical role.
A NREL study compared the benefits of local ownership versus
outside ownership and found that locally owned wind projects
generate 2.5 times more jobs and 3.1 times more rural economic
benefits than those with outside ownership. Our policy strongly
encourages that any federal policies should provide incentives
and foster the development of locally owned projects.
Unfortunately, tapping rural America's clean energy
potential is not likely to occur without the support of
governmental policies. Community-based wind energy projects
face additional hurdles because of limited capital access. It's
becoming increasingly difficult to produce wind generators and
associated equipment for community wind projects due to the
size of those projects and a shift towards large-scale
development processes, not just in the cost but also in the
infrastructure and access to the grid.
Moreover, because the PTC can only be used against passive
income, many community-based projects are not able to fully
utilize this provision. Most interested parties in these
community projects are farmers and local citizens that own the
land with the potential for wind development yet do not have
sufficient levels of passive income necessary to utilize the
tax break. We believe it is critical for the federal policy to
continue to foster the development of renewable electricity
projects. We support the extension of the PTC. We would hope
that it would be a longer term so we would get the market
certainty and investment in the technology that's necessary.
Thank you, Mr. Chairman. I would be glad to answer any
questions.
[The prepared statement of Mr. Tom Buis follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Great. Thank you very much. All time for
statements by the witnesses has expired, so now we'll turn to
the question and answer period. The chair will recognize
himself.
Mr. Abate, you said how many new megawatts were installed
for wind in 2007?
Mr. Abate. In the United States, 5,244.
The Chairman. Five thousand, two hundred and forty-four.
And that represented 30 percent of all new electricity
installed in the country last year?
Mr. Abate. All new nameplate capacity 30 percent, correct.
Second to only natural gas.
The Chairman. Natural gas what was percent?
Mr. Abate. It was first--I believe it was about half.
The Chairman. About 50 percent?
Mr. Abate. Yes.
The Chairman. And I think it was about 10 percent was coal?
Mr. Abate. Yes.
The Chairman. And the rest came from all other sources. So
what would you predict would happen in 2008, this year, if the
production tax credit is extended?
Mr. Abate. Well, in--that's a good question. And when you
look at our view, we can see the next couple of years. The
market is long on turbines right now with the full confidence
that the production tax credit will be extended. The pro formas
for these investors all have that in them. So in 2008, our
production capacity, if you take what that's scaling to and
doubling it, it will be between 7 and 8 gigawatts.
The Chairman. Seven and eight thousand new megawatts?
Mr. Abate. Yes.
The Chairman. On top of only 5,200 this year?
Mr. Abate. Right.
The Chairman. So what would it project out to then for
2009? In other words, what's the projection in terms of new
wind power?
Mr. Abate. If you just take our order book and what we're
seeing as far as demand in the market, with a stable policy, by
2010, this country could be well over 10 gigawatts.
The Chairman. Ten thousand megawatts every year being
produced?
Mr. Abate. Yes.
The Chairman. And how many new nuclear power megawatts will
come online this year in the United States, do you know?
Mr. Abate. None.
The Chairman. How many next year, do you know?
Mr. Abate. The same.
The Chairman. How many in 2010, do you know?
Mr. Abate. For some time it'll be zero.
The Chairman. Zero.
Mr. Abate. And the reason is capacity, to be able to pull
that off and the investment and the long-term cycle of that
technology.
The Chairman. So in other words, if there's 10,000 new
megawatts every year for 2010, 11, 12, 13, 14, 15, and it could
actually get larger, huh? So there could be 100,000 new
megawatts of wind installed in the United States before the
first 1,000 megawatts of nuclear power comes online?
Mr. Abate. That's a reasonable assessment, yes.
The Chairman. Mr. Unger, do you think that's a reasonable
assessment?
Mr. Unger. You know, the market----
The Chairman. Could you move in and turn on the microphone,
please?
Mr. Unger [continuing]. Sorry. I think the market will
speak to that. One of the things that I look at is who is going
to finance these projects? Public markets, investment bankers
and the like are very willing to fund wind projects, very
willing to fund geothermal projects, willing to find biomass
projects. It doesn't appear to be an appetite today to fund
nuclear projects. The French are building I think the most
advanced nuclear technology plant in the world today. It's $2
billion and it's already years behind schedule. So it's quite a
bit of uncertainty in the construction cost before they can
even come online, and the generating costs, which are higher
than that of wind, certainly don't include what we do with the
waste. So it creates uncertainty which investors are unhappy
about.
And as he says, if we have certainty about tax credits,
then we have certainty about tying up our money. Venture
capitalists tie up their money for ten years. And we'd like to
have that kind of certainty.
The Chairman. So you're saying that you agree with Mr.
Abate's projection for how rapidly this is going to increase in
the wind sector?
Mr. Unger. Oh, completely. Completely.
The Chairman. Or is he even being conservative?
Mr. Unger. He may be being conservative. The nice thing
about wind and solar is that, you know, we were having this
conversation before--some states are blessed with a lot of sun.
Some are blessed with a lot of wind. You can scale these
plants. But the kind of commercial plants we're talking about
here are very, very large. But in rural America where there's,
you know, fewer access to generation lines and the like, you
can also have smaller plants like this, which create a lot of
local jobs around local economies. It's very difficult to do
that with very large coal-fired or nuclear-fired plants.
The Chairman. And Ms. Lockwood, what do you think is the
potential in Arizona for solar power by 2015? How many
megawatts do you think you can be producing?
Ms. Lockwood. Mr. Chairman, I believe with a long-term
extension of the ITC, you could see well over 1,000 megawatts
of large-scale solar built in Arizona alone by 2015, probably
even more than that.
The Chairman. Probably even more than that?
Ms. Lockwood. Mm-hmm.
The Chairman. And, again, this is all before the first
nuclear power plant comes online after 25 years. So that's
pretty big news in terms of what is happening out in the
marketplace with an extension of the production tax credit for
renewable energy.
And at this point my time has expired. I'll turn and
recognize the gentleman from Wisconsin.
Mr. Sensenbrenner. Thank you very much, Mr. Chairman. We've
been on kind of a perpetual debate on tax credit extenders. The
Ways and Means Committee doesn't want to make any of these
things permanent, which I believe is a mistake. But that
frankly is the way it is.
We may end up getting to the business of prioritizing tax
extenders to get something through the Senate. I'd like to ask
each of you that's kind of in the business which two tax
extenders would you prioritize as being the top two? And I
would throw in the R&D tax credit as well in terms of
incentivizing new technologies, so put that on the table. So
let's start with you, Mr. Abate.
Mr. Abate. Yeah. I think full value production tax credit
would be number one for as long as that can work and get it
through. And as I had said, because of the pro formas that our
customers have counted on, that's what's in their model. So
anything different than that would be a disruption, in our
view.
Second is investment tax credit for some of the large
capital projects. You know, wind is more of a production-based.
The investment tax credit would be number two.
Mr. Sensenbrenner. Okay. Mr. Swezey.
Mr. Swezey. Congressman, I'll go back to your original
statement that I believe sincerely that we need a diverse
portfolio of energy resources.
Mr. Sensenbrenner. I'm asking for priorities. I know you
want it all. We might not be able to give it to all.
Mr. Swezey. From my company's perspective, we're very
interested in extension of the solar credit, long-term
extension to give security to the predictability----
Mr. Sensenbrenner. And what's number two?
Mr. Swezey [continuing]. And we're very interested in the
R&D tax credit as well, because we have----
Mr. Sensenbrenner. Okay. Mr. Unger.
Mr. Swezey [continuing]. A very large R&D function at our
company.
Mr. Sensenbrenner. Mr. Unger.
Mr. Unger. I think we would be looking for tax credits that
would not select one industry over the other. We are
specifically looking for a playing field that will allow a
variety of solutions to compete.
Mr. Sensenbrenner. Okay. Number one and number two.
Mr. Unger. So if any of the tax credits exclude others,
then I think we're trying to play economic policy. So R&D
across the board would be good. You know, production tax
credits across all technologies, not to consider one technology
over the other.
Mr. Sensenbrenner. Okay. Thank you. Ms. Lockwood.
Ms. Lockwood. Congressman Sensenbrenner, our first priority
would be long-term extension of the investment tax credit
because of our solar resource in Arizona. Number two would be
the production tax credit.
Mr. Sensenbrenner. Okay. Ms. Jagger.
Ms. Jagger. Congressman, I think that--I would like to talk
about a proposal that was made yesterday.
Mr. Sensenbrenner. I'm asking which tax credits were the
top two priorities.
Ms. Jagger. Well, I think an all-across technology tax
credit, but I will support as well the fitting in tariff that
was introduced yesterday by Congressman Jay Inslee.
Mr. Sensenbrenner. Okay. Mr. Buis.
Mr. Buis. Production tax credit. The PTC and also the
VTECH, which helps the ethanol and biodiesel.
Mr. Sensenbrenner. Okay. Thank you very much. I yield back
the balance of my time.
The Chairman. The gentleman's time has expired. The chair
recognizes the gentlelady from South Dakota, Ms. Herseth
Sandlin.
Ms. Herseth Sandlin. Thank you, Mr. Chairman. Mr. Buis,
thank you for your testimony today and the study that the
National Farmers Union has done. Chairman Markey and I have
discussed the issue of the transmission capacity in getting
these wind resources out of the Great Plains and other parts of
the country, and we know how important that will be to fully
maximize the benefits that the wind energy and the solar energy
in certain areas across rural America have.
But I entirely agree with you as well about the importance
of the local ownership and the local use of wind energy rather
than just exporting these renewable sources out of the states
that have the most abundant source. So you have stated in a
number of areas in your testimony the importance of that local
investment, the importance of altering the PTC to serve as an
incentive for that local ownership and investment and
development community-based wind energy, the community-based
energy development like we've seen in Minnesota.
Could you talk in just a little bit greater terms about
where we need to make changes in federal policy as well as
working with our counterparts in the state legislatures,
whether that's with net metering or other options available to
assist farmers and ranchers and rural families not just in the
lease payments they get for turbines on their land owned by
larger wind farms and selling those to larger utilities, but
how we can do more to benefit those rural economies based on
some of the statistics you gave in job creation?
Mr. Buis. Thank you, Congresswoman Herseth. I think you
captured a lot of what's really going on in rural America.
Every farmer, every rancher, every local person I've met in the
past two years are so excited about the opportunity to help
develop energy, not just ethanol, not just biodiesel, but wind
and solar. And we have these obstacles.
The state of Minnesota, as you referred to, has a
community-based requirement for any renewable energy developed
in that state. Ten percent has to be community owned. And
that's to carve out some local ownership, you know. We've seen
in the past in the production of farm commodities when that
ownership goes away, the money follows. It's taken out of those
communities. It's not reinvested in those communities. And the
beauty about ethanol has been its been local ownership. The
single largest owners and producers of ethanol today are not
the big multinational grain companies. It's farmers and local
communities. They own 40 percent of the ethanol production.
That gets reinvested in the community. You see boards coming
off the storefronts instead of going up.
If we allow this, whether it's ethanol or wind or solar, to
all be taken out of that local control where they're just
paying for a footprint on a wind tower, I think we'll lose
those jobs, we'll lose those benefits and we'll lose a
tremendous opportunity.
Ms. Herseth Sandlin. Thank you. And then the only other
point I would make is the further work that we'll do with you
and, Chairman Markey, if we can pursue this, the issue of the
PTC, how it's structured because it's currently only against
the passive income.
The Chairman. Absolutely.
Ms. Herseth Sandlin. Okay. Thank you. And thank you, Mr.
Chairman.
The Chairman. Thank you. The gentlelady's time has expired.
The chair recognizes the gentleman from California, Mr.
McNerney.
Mr. McNerney. Thank you, Mr. Chairman. And as many of you
know, I spent two decades of my career in the wind industry
business, and I understand exactly how the production tax
credit affects the industry and how the cyclical pattern has
put us way behind the Europeans and other parts of the world.
Mr. Unger, I have a question. What percentage of your
production of new machines is being sold to overseas customers?
Mr. Unger.
Mr. Abate. Mr. Abate you said or Unger?
Mr. McNerney. I'm sorry. Mr. Abate.
Mr. Abate. Oh. About 30 percent.
Mr. McNerney. And what percentage of those are produced
overseas, of the 30 percent?
Mr. Abate. Those are produced overseas.
Mr. McNerney. So it's fair to say that in our opinion, if
we extend the production tax credit, many more jobs will be
created in the United States?
Mr. Abate. Oh, yeah. Seventy percent are landing here in
the United States, and a big part is, I think as you have a
production tax credit here, more components, more machines will
land here. If that changes, our customers who land these pieces
of equipment are looking to go to other parts of the world.
Mr. McNerney. So if you sell machines here, you both
produce them here and you create jobs in the field with
maintenance and installation?
Mr. Abate. Right.
Mr. McNerney. Most of the work that goes into producing a
windmill, is that all work produced here in the United States,
or do you import products from overseas?
Mr. Abate. No. The assembly occurs here. Components we do
source globally. But a lot of the components, due to their
size, blades will be here, towers will be here. You know,
components, electronic components can be global. But logistics
make up about 20 percent of the cost of a wind project. So it
really forces that technology to be local relative to where the
equipment is going to land.
Mr. McNerney. Thank you. And, Mr. Swezey, I think it was
very illustrative that all of your production is being sold
overseas now. And that's a terrific loss for the United States
of America. How can we incentivize customers here to start
buying your products and then selling them here in our country?
Mr. Swezey. Right. All our customers for our thin film
solar equipment line are overseas, and that has to do, as I
explained both in terms of the incentives for locating
production but also the end-use market. The panels that our
technology produces are five point square meter panels. I mean,
they're based on flat panel display technology on glass. These
are very large panels, and it makes sense to try to locate
these production facilities near the end-use load. And we
believe that if we do have a clear, consistent, long-term
policy towards solar in the U.S. that we'll see more--some of
this manufacturing occurring in the U.S. for that reason,
because it will build the market.
The U.S. market today is only 10 percent of the entire
global photovoltaic industry, yet we generate 25 percent of the
global electricity. So there's a disconnect there between how
much we're doing here in solar and what the rest of the world
is doing.
Mr. McNerney. Thank you. Ms. Jagger, what steps of European
governments are most effective in your opinion in developing
new energy technologies and implementing that?
Ms. Jagger. I think that until now, the most effective has
been Germany, and the Feed-In tariff that was introduced by the
member of Parliament, Mr. Hermann Scheer. I think that had the
most effect and they have been able to produce about 200,000,
between 200,000 and 250,000 jobs.
So that's what I was talking about with Congressman Jay
Inslee together with the organization that I chair, yesterday,
introduce the tariff legislation or policy in this country, and
it will be really important that his policy be supported. I
think it will make a big difference for this country. There are
about 40 countries that have already, you know, embarked or
embraced the Feed-In tariffs around the world.
Mr. McNerney. Okay. Thank you. And I reserve----
The Chairman. The gentleman's time has expired. We
appreciate that. We have a series of roll calls on the floor,
and we're trying to ensure that each member who is here gets a
chance to ask some questions. Mr. Engel is here as a special
guest of the Select Committee. We'll recognize him for the
purpose of asking questions.
Mr. Engel. Thank you, Mr. Chairman. It's good to be a
special guest. Ms. Jagger, in your testimony, you said--I was
struck by your remarks that you used to believe that reduced
energy consumption was an important first step, and you used to
believe that it would be enough to encourage more localized
lifestyles, but you now say you realize that that's not enough.
I also have come to that conclusion, as have many Members
of Congress, and I think it's important to keep saying. I'm
embarrassed that our country has not agreed to sign
international agreements that would help with global warming.
But countries like India and China, who have been exempted from
these things, I really believe that if there are new
international agreements that countries like India and China,
which are now becoming more responsible for global warming,
need to be included in these agreements as well. Would you
agree?
Ms. Jagger. What I will say, Congressman, is that it is
vital that the United States realize that they need to sign
onto the Kyoto Plus treaty. It is vital as well that the
industrialized nations of the world realize that they need to
come up with a reduction of CO2 emission that is
realistic and not just simply what they think they can do,
because otherwise, we will not be able to avert a climate
change catastrophe.
With regard to India and China, I think that it is very
important that we supply and that we help them with providing
renewable energy technology. What is important as well to
understand for certain countries is that we cannot make them
accountable for what we in the developed world have been
responsible. Therefore, we have to keep that in mind, that it
will be totally unfair if tomorrow we ask from China, India or
Brazil to come up and sign the exact kind of agreement that
would be required from the United States or from a European
country.
Mr. Engel. How about Brazil? Since you mentioned Brazil, I
noticed in your testimony, you know, you said that ethanol and
nuclear are not a solution. Yet I was just in Brazil and was
amazed at the amount of--how much ahead they are of this
country in terms of planning for the future and looking at
alternative energy and weaning their country away from gasoline
and things like that. Do you think we could learn something
from Brazil?
Ms. Jagger. Well, there are certain polices that have been
implemented in Brazil that I will question. I mean, I think
that we have to realize that the use of biofuels and
bioethanol, some of those technologies can lead us to have a
humanitarian catastrophe, because we will be using farm land
that should be used for feeding people rather than for--be used
as fuel.
I mean, one thing that I'd like to mention is that 200
times more surface area is required to produce energy from
crops as compared with energy from photovoltaic cells.
Mr. Engel. Thank you. I know, Mr. Chairman, we have votes,
so I'll end my questioning and I thank you for letting me
participate.
The Chairman. I don't want the gentleman to miss the roll
call. There's now under one minute left to go, to go
approximately a quarter of a mile to make the roll call on the
House floor.
Mr. Engel. Well, it's good exercise. It'll contribute to--
against global warning I guess, you know, if we walk on our own
and don't ride.
The Chairman. Let's walk that walk then because we will
miss the roll calls otherwise. But I think that it's pretty
clear from the panel today that the extension of the production
tax credits, the incentive to this industry is going to result
by 2015 in 100,000 megawatts of renewable energy, electricity
in our country, minimum.
And by the way, there's only 100,000 megawatts of nuclear
power in the United States today after 50 years of federal
subsidies. So no one should be embarrassed about the fact that
we are going to give a relatively modest break to the
competition to nuclear and other energy resources.
I think rural America is ready to go. We have to solve the
transmission issues. If we get the tax issues right, then we
can have a clean energy revolution that produces 15, 20, 25
percent of the electricity in our country and sends a signal to
the rest of the world that we are serious.
We thank all of you. You're great leaders. With that, this
hearing is adjourned. Thank you.
[Whereupon, at 10:55 a.m., the select committee was
adjourned.]
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