[Senate Hearing 112-213]
[From the U.S. Government Printing Office]
S. Hrg. 112-213
MAJUMDAR NOMINATION
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
ON
THE NOMINATION OF ARUNAVA MAJUMDAR TO BE UNDER SECRETARY OF ENERGY
__________
DECEMBER 8, 2011
Printed for the use of the
Committee on Energy and Natural Resources
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana JAMES E. RISCH, Idaho
MARIA CANTWELL, Washington MIKE LEE, Utah
BERNARD SANDERS, Vermont RAND PAUL, Kentucky
DEBBIE STABENOW, Michigan DANIEL COATS, Indiana
MARK UDALL, Colorado ROB PORTMAN, Ohio
JEANNE SHAHEEN, New Hampshire JOHN HOEVEN, North Dakota
AL FRANKEN, Minnesota DEAN HELLER, Nevada
JOE MANCHIN, III, West Virginia BOB CORKER, Tennessee
CHRISTOPHER A. COONS, Delaware
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
McKie Campbell, Republican Staff Director
Karen K. Billups, Republican Chief Counsel
C O N T E N T S
----------
STATEMENTS
Page
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Franken, Hon. Al, U.S. Senator From Minnesota.................... 3
Majumdar, Arunava, Nominee to be the Under Secretary of Energy... 4
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 2
Rockwell, Victoria A., President, American Society of Mechanical
Engineers, New York, NY........................................ 17
APPENDIX
Responses to additional questions................................ 19
MAJUMDAR NOMINATION
----------
THURSDAY, DECEMBER 8, 2011
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 9:33 a.m. in room
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman,
chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. Why don't we go ahead and get started.
Senator Murkowski is on her way, but has been delayed, so she
asked us to proceed without her until she can arrive.
The committee meets this morning to consider the nomination
of Dr. Arun Majumdar to be the Under Secretary of Energy.
Dr. Majumdar is currently the Director of ARPA-E, the
Advanced Research Projects Agency at the Department of Energy.
The Senate confirmed his nomination for that position 2 years
ago in October 2009. He also serves as Secretary Chu's senior
advisor.
The Office of the Under Secretary is one of the most senior
at the Department. Its portfolio includes energy efficiency and
renewable energy, fossil energy, nuclear energy, and
electricity. It has been vacant since October 2010, when Dr.
Kristina Johnson resigned.
Since then, its functions have been performed on an acting
basis, first by Cathy Zoi until she resigned earlier this year,
and since March by Dr. Majumdar.
Dr. Majumdar is a highly distinguished scientist and
engineer. Before coming to Washington, he was the Associate
Laboratory Director for Energy and Environment at Lawrence
Berkeley National Laboratory, and was a Professor of Mechanical
Engineering and Material Sciences and Engineering at the
University of California at Berkeley.
He holds over a dozen patents. He has authored close to 200
scientific papers. He served as an advisor to both the National
Science Foundation and the President's Council of Advisors on
Science and Technology, as well as startup companies and
venture capital firms in Silicon Valley. He holds a doctorate
from the University of California at Berkeley, is a member of
the National Academy of Engineering.
We are very fortunate to have such a highly qualified and
experienced nominee for this important position, and I strongly
support his nomination. I am pleased to welcome Dr. Majumdar
back before the committee this morning.
Since Senator Murkowski is not able to give her statement
right now, and I am told Senator Franken has another engagement
and wanted to be recognized for a minute or 2 before he had to
leave. So Senator Franken, why don't you go ahead.
Senator Franken. Thank you, Mr. Chairman. I note that the
ranking member has just arrived and would defer to her,
considering that she is the ranking member.
The Chairman. All right. We will----
Senator Franken. Also, when you say I have another
engagement, it sounds like I am doing a roast for, you know,
Shecky Greene or something. I have another committee hearing.
The Chairman. I did not know the nature of the engagement,
but I wanted to leave it vague.
Senator Franken. Let me be clear. It is a hearing.
The Chairman. A hearing, I see.
Senator Franken. Of a Senate Committee.
The Chairman. I see. Senator Murkowski----
Senator Franken. I would like to make a remark.
The Chairman. All right, we----
Senator Franken. I am sorry I interrupted you. Back to you.
The Chairman. That is fine.
Senator Murkowski, why don't you go ahead with any opening
statements you would like to make, then Senator Franken had
asked that he be allowed to speak for a minute or 2 before he
has to go to another hearing. Then we will proceed with the
rest of the hearing.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman. I appreciate
that clarification. It was a little confusing first walking in
here.
Thank you for deferring, Senator Franken and good morning,
Doctor. I appreciate you coming back to the committee. I thank
you again for your willingness to accept an appointment at the
Department of Energy.
We have had an opportunity to spend a little time together.
You came up to Alaska at my invitation, and that of a friend
outside of Fairbanks, to look at low temperature geothermal. I
think it is fair to say that we share a genuine interest in
those exciting technologies, a little bit of the cutting edge,
out of the box type thinking. I appreciate the enthusiasm and
the passion that you bring to these issues.
By all accounts, your background as a scientist and
engineer makes you a good candidate and certainly a good fit
there at DOE. While it is probably not easy, or probably not
fun either, to be responsible for a big piece of a Federal
Department, we have all benefited from your decision to help
implement our Nation's energy policy.
It was just over a couple of years ago, and you took over a
tough task in standing up ARPA-E, a new agency with no history,
but you were charged with developing some game changing energy
technologies. Then back in February of this year, you agreed to
take on even more responsibility as the Acting Under Secretary.
So all of this has led to one of today's greatest
scientific mysteries and that is: has Dr. Majumdar figured out
how to survive with no sleep? Because I wonder. You have a lot
going on and again, you do it with incredible energy,
incredible passion. But I wonder where you find the hours in
your day. I think you have done a considerable job in balancing
the demands of 2 time-consuming jobs for some time.
If you are confirmed as Under Secretary of Energy, as I
hope you will be, you are going to continue to face a variety
of tough challenges related to program direction, budgeting
priorities, funding decisions. It is difficult to advance
energy innovation and new technologies under the best of
circumstances, and I think particularly so when Federal dollars
are in short supply.
But that is exactly what we are going to be asking you to
do, and I am glad that you are willing to accept the challenge.
I look forward to being able to ask you a few questions this
morning. Again, thank you for your willingness to serve.
Thank you, Mr. Chairman.
The Chairman. Thank you very much. Senator Franken.
STATEMENT OF HON. AL FRANKEN, U.S. SENATOR
FROM MINNESOTA
Senator Franken. Thank you, Mr. Chairman, for holding this
important hearing in such a timely manner to consider the
nomination of Dr. Arun Majumdar to be Under Secretary of
Energy. I would like, also, to thank the Chairman for giving me
a minute to congratulate Dr. Majumdar on his nomination before
my next engagement.
Dr. Majumdar is exactly the type of person this country
needs leading our efforts to develop and deploy energy
technologies to meet the challenges of climate change and
national security.
Thank you, Dr. Majumdar, for your pioneering role as the
first Director of ARPA-E, the only U.S. agency devoted to
funding transformational energy R and D. Dr. Majumdar not only
led ARPA-E through its first 4 funding opportunity
announcements, he also put forward a longer term vision for the
agency. This longer term vision can especially be seen in his
discussion with stakeholders about how to build a market for
ARPA-E technologies, to avoid the dreaded ``valley of death''
between development and commercialization.
I had the pleasure to host Dr. Majumdar in Minnesota in
October when he travelled to join me for an energy summit that
I had convened there. This provided a terrific forum for
Minnesota's renewable energy leaders to discuss energy policy
directly with the Department of Energy. Dr. Majumdar's comments
were incredibly well received and I deeply appreciate, sir,
your time and efforts.
Thank you, Mr. Chairman, and congratulations once again to
you, Dr. Majumdar.
The Chairman. Thank you very much.
Senator Franken. Thank you.
The Chairman. Doctor, let me put us through our usual
drill, which you have been through before, related to all
nominees. The rules of our committee require that all nominees
be sworn in connection with their testimony. So I would ask you
to stand and raise your right hand, please.
Do you solemnly swear that the testimony you are about to
give to the Senate Committee on Energy and Natural Resources
shall be the truth, the whole truth, and nothing but the truth?
Mr. Majumdar. I do.
The Chairman. Please be seated.
Before you begin your statement, I will ask 3 questions
that we address to each nominee who comes before this
committee.
First, will you be available to appear before this
committee and other congressional committees to represent
departmental positions and respond to issues of concern to the
Congress?
Mr. Majumdar. I do.
The Chairman. The second question. Are you aware of any
personal holdings, or investments, or interests that could
constitute a conflict of interest, or create the appearance of
such a conflict should you be confirmed and assume the office
to which you have been nominated by the President?
Mr. Majumdar. My investments, personal holdings, and other
interests have been reviewed both by myself and the appropriate
ethics counselors within the Federal Government. I have taken
the appropriate action to avoid any conflicts of interest.
There are no conflicts of interest or appearances thereof to my
knowledge.
The Chairman. Very good.
Let me ask the third question then. Are you involved or do
you have any assets that are held in a blind trust?
Mr. Majumdar. No.
The Chairman. At this point, our tradition is to allow the
nominee, yourself, Dr. Majumdar, to introduce any guests or
family members that might be here with you.
Mr. Majumdar. Unfortunately, my family members could not
come here, but I have my DOE family right behind me.
The Chairman. All right. They are welcome.
Now at this point, we will recognize you to make whatever
statements you would like to make to the committee.
TESTIMONY OF ARUNAVA MAJUMDAR, NOMINEE TO BE UNDER SECRETARY OF
ENERGY
Mr. Majumdar. Thank you, Mr. Chairman.
Chairman Bingaman, Ranking Member Murkowski, and
distinguished members of this committee. It is my distinct
honor and privilege to appear before you today as the nominee
for Under Secretary of Energy.
I would like to first thank my wife, Dr. Aruna Joshi, and
my 2 daughters, Shalini and Anjali, who have been immensely
tolerant over the last 2 years of my bicoastal lifestyle
spanning California and Washington. Unfortunately, they could
not be here today.
I wish to also thank President Obama for his confidence in
me, and Secretary Chu for being a thoughtful mentor, an
outstanding boss, and someone I have the honor to call a
friend.
As I told this committee over 2 years ago, I spent most of
my career as an educator and researcher in science and
engineering at the University of California at Berkeley and
Lawrence Berkeley National Labs.
While at Berkeley Labs, I led strategic initiatives in the
areas of energy efficiency, renewable energy, and energy
storage. In 2005, I was elected to the National Academy of
Engineering, the Nation's highest honor in engineering.
The breadth and depth of my knowledge in science and
engineering, and management of technological innovation, has
served me well in taking on the challenge of being the first
Director of ARPA-E, an honor and a privilege I will cherish for
the rest of my life. In ARPA-E's short existence, we have stood
up an organization with the philosophy of excellence in
everything we do.
I would like to briefly describe the 5 core values which I
believe are instrumental in ARPA-E's success and which, if
confirmed, I intend to bring to my role as the Under Secretary
of Energy.
Value No. 1: people. ARPA-E has been able to attract some
of the best and brightest scientists and engineers as program
directors. We have also assembled a superb administrative
staff, support staff.
Value No. 2: speed and efficiency. To be globally
competitive, speed is of essence. We have developed a
streamlined process where we can execute with a fierce sense of
urgency and unprecedented speed and efficiency.
Value No. 3: breakthrough technologies through competition.
ARPA-E funds research to translate science into breakthrough
energy technologies that are too risky for the private sector,
but if successful could create the foundation for entirely new
industries. ARPA-E programs have attracted some of the best
scientists, engineers, and entrepreneurs to compete against
each other and provide a portfolio of approaches that will
ensure our national security, economic security, and
environmental security.
Value No. 4: stewardship and integrity. All projects are
selected purely based on merit. We also engage in active
program management and have had the discipline to discontinue
projects when they simply did not work out.
Finally, value No. 5: create value for a secure American
future. It is important that ARPA-E creates value for society
and makes an impact on our economy. For example over the last 2
years, 11 of ARPA-E technologies received $40 million in
funding, which allowed them, the teams, to conduct the research
that has subsequently attracted more than $200 million from
private sector investment in 2 years, 5 times leveraging the
Federal dollars, and this number continues to grow.
While such innovations in new energy technologies are
critical and necessary, they are not sufficient. Cost and scale
are equally important to address the significant challenges and
opportunities we face in the 21st century.
First the challenges. We import roughly 50 percent of the
oil we use and pay about $1 billion a day. America invented the
lithium-ion battery, and in 2009, we manufactured only 1
percent of the world's batteries. We invented the solar cell,
and this year we will manufacture only 7 percent of the world's
photovoltaic modules.
We have an aging grid infrastructure that needs to be
modernized and secured. We have massive coal and natural gas
resources that we must use in environmentally responsible and
cost effective way.
We invented nuclear energy as a clean source of
electricity, and we must regain our technological lead and
become globally competitive.
Now the opportunities. The rising world population and
economic growth presents the biggest economic opportunity of
the 21st century with trillions of dollars of worldwide
investment in the next few decades. Other nations are
positioning themselves to take advantage of this opportunity
and become energy leaders of the future.
America faces a choice of what to do with the opportunity
presented by the global energy race. We can compete in the
global marketplace creating American jobs and selling American
products, or we can buy technologies of tomorrow from abroad. I
believe the road to a secure future is to invent locally, make
locally, and sell globally and we need to do this with fierce
urgency.
This requires the Department of Energy to galvanize all its
rich resources in science, engineering, and policy from across
the whole enterprise spanning the Office of Science, APRA-E,
and the applied energy offices, the national laboratories, and
university and industrial research labs to catalyze and enable
our small and large industries to become globally competitive
and ensure a secure future for our children and grandchildren.
If confirmed, I will work diligently within DOE and with
Congress to make sure that the DOE will work as an integrated
team where the whole is bigger than the sum of the parts to
address the challenges and avail the opportunities of the 21st
century.
I thank you for the opportunity to testify before you
today, and I look forward to answering the questions.
[The prepared statement of Mr. Majumdar follows:]
Prepared Statement of Arunava Majumdar, Nominee to Be Under Secretary
of Energy
Chairman Bingaman, Ranking Member Murkowski, and distinguished
members of this committee, it is my distinct honor and privilege to
appear before you today as the nominee for Under Secretary of Energy.
I would like to first thank my wife, Dr. Aruna Joshi, and our two
daughters, Shalini and Anjali, who have been immensely tolerant over
the last two years of my bi-coastal lifestyle spanning California and
Washington. Unfortunately, they cannot attend today's hearing. I wish
to also thank President Obama for his confidence in me and Secretary
Chu for being a thoughtful mentor, an outstanding boss, and someone I
have the honor to call a friend.
As I told this committee over two years ago, I spent most of my
career as an educator and researcher in science and engineering at the
University of California, Berkeley and Lawrence Berkeley National
Laboratory. While at Berkeley Labs, I led strategic initiatives in the
areas of energy efficiency, renewable energy, and energy storage. In
2005, I was elected to the National Academy of Engineering, the
nation's highest honor in engineering.
The breadth and depth of my knowledge in science, engineering, and
management of technological innovation has served me well in taking on
the challenge of being the first Director of the Advanced Research
Projects Agency--Energy (ARPA-E)--an honor and privilege that I will
cherish for the rest of my life. In ARPA-E's short existence, we have
stood up an organization with a philosophy of excellence in everything
we do.
I would like to briefly describe the five core values, which I
believe have been instrumental in ARPA-E's success and which, if
confirmed, I intend to bring to my role as the Undersecretary of
Energy. Value #1: People. ARPA-E has been able to attract some of the
best and the brightest scientists and engineers as program directors.
We also have assembled a superb administrative support staff. Value #2:
Speed and efficiency. To be globally competitive, speed is of the
essence. We have developed a streamlined process where we can execute
with a fierce sense of urgency and unprecedented speed and efficiency.
Value #3: Breakthrough technologies through competition. ARPA-E funds
research to translate science into breakthrough energy technologies
that are too risky for the private sector, but if successful could
create the foundation for entirely new industries. ARPA-E programs have
attracted some of the best scientists, engineers and entrepreneurs to
compete against each other and provide a portfolio of approaches that
will ensure our national security, economic security and environmental
security. Value #4 Stewardship and integrity. All projects are selected
purely based on merit. We also engage in active program management, and
have had the discipline to discontinue projects when they simply did
not work out. Finally, Value #5: Create value for a secure American
future. It is important that ARPA-E creates value for society and makes
an impact on our economy. For example, over the last two years, 11 of
ARPA-E technologies received $40 million in funding, which allowed the
teams to conduct research, that has subsequently attracted more than
$200 million of private sector investment--five times leveraging of
federal dollars. And this number continues to grow.
While such innovations in new energy technologies are critical and
necessary, they are not sufficient. Cost and scale are equally
important to address the significant challenges and opportunities we
face in the 21st century. First, the challenges our country faces. We
import roughly 50 percent of the oil we use and pay about $1 billion
per day. America invented the lithium-ion battery, and in 2009 we
manufactured only 1 percent of the world's batteries. We invented the
solar cell and this year we will manufacture only 7 percent of the
world's photovoltaic modules. We have an aging grid infrastructure that
needs to be modernized and secured. We have massive coal and natural
gas resources that we must use in an environmentally responsible and
cost-effective way. We invented nuclear energy as a clean source of
electricity, and we must regain our technological lead and become
globally competitive.
Now, the opportunities. The rising world population and economic
growth presents the biggest economic opportunity of the 21st century
with trillions of dollars of worldwide investment in the next few
decades. Other nations are positioning themselves to take advantage of
this opportunity and become energy leaders of the future. America faces
a choice about what to do with the opportunity presented by the global
energy race. We can compete in the global marketplace--creating
American jobs and selling American products--or we can buy the
technologies of tomorrow from abroad. I believe the road to a secure
future is to: invent locally, make locally and sell globally. And we
need to do this with fierce urgency.
This requires the Department of Energy to galvanize all its rich
resources in science, engineering, and policy from across the whole
enterprise spanning the Office of Science, ARPA-E and the Applied
Energy Offices, the national laboratories, and university and
industrial research laboratories to catalyze and enable our small and
large industries to become globally competitive and ensure a secure
future for our children and grandchildren. If confirmed, I will work
diligently within DOE and with Congress to make sure that the DOE will
work as an integrated team where the whole is bigger than the sum of
its parts, to address the challenges and avail the opportunities of the
21st century.
I thank you for the opportunity to testify before you today, and I
look forward to answering your questions.
The Chairman. Thank you very much for your testimony.
Dr. Majumdar, as you know, the loan guarantee program at
the Department of Energy has been the subject of a lot of
controversy and criticism particularly because of the loan to
Solyndra. I wanted to just, in order to make a record of, and
give you the opportunity to state your position on this, ask
you a few questions.
Time Magazine referred to your current agency, ARPA-E, as
``The Department of Big Dreams.'' ARPA-E's job, as I understand
it, is to promote transformational technological advances in
energy technologies, but not to guarantee loans for commercial
deployment of new energy technologies.
As I understand it, the loan guarantee program is managed
by a separate office that is not part of ARPA-E, is that
accurate?
Mr. Majumdar. Yes.
The Chairman. Did you personally have any responsibility
for guaranteeing or approving the Solyndra loan in your
capacity as the Director of ARPA-E?
Mr. Majumdar. No.
The Chairman. It appears from the Department's
organizational chart that the loan program office reports
directly to the Secretary of Energy, and not through the Under
Secretary.
Did you have any responsibility for guaranteeing the
Solyndra loan while serving as Acting Under Secretary?
Mr. Majumdar. I had no role.
The Chairman. The final question, will you have any
responsibility for the loan guarantee program if confirmed as
Under Secretary other than providing technical advice if
requested?
Mr. Majumdar. If requested, I will provide that. But
otherwise, I have no responsibilities.
The Chairman. Thank you very much.
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
Just let me follow up with the Solyndra and the loan
guarantee program very briefly here. I appreciate the Chairman
asking those very direct questions to you and your succinct
answers.
A little over a month ago, Secretary Chu was quoted as
saying that, ``We can design a program that is actually self-
paid and still stimulate the most innovative industries.'' So I
took this to mean that the Department no longer supports the
appropriation of funds to cover credit subsidy costs.
I would like to know whether that is an accurate
interpretation of Secretary Chu's remarks. Whether or not you
can share your perspective, then, on the top 2 or perhaps t3
changes that you believe are necessary to prevent a similar
situation to what we have seen with Solyndra in the future.
Mr. Majumdar. Senator Murkowski, as I just mentioned, I
really had no involvement----
Senator Murkowski. Right.
Mr. Majumdar. In the loan guarantee program. I am not sure
I am really qualified to say what is the top 2 or the bottom 2
priorities that we should have.
The only thing I would say is that the President has
proposed funding or requested funding for the loan guarantee
programs in the FY12 budget, and I support the President.
Senator Murkowski. We have been working here in the
committee to report out a cyber security bill. We moved the
Grid Cyber Security Act that came through this committee on a
bipartisan basis.
I do not know whether you have had an opportunity to review
that legislation insofar as being able to give us your
thoughts, and whether or not you believe that Congress should
proceed on a sector-specific basis like we have done with this
legislation or, perhaps, via a Government-wide approach. This
is something that the Majority Leader has named as a priority.
We are trying to figure out how we advance that legislation,
but your comments, if any, on cyber security legislation?
Mr. Majumdar. I have not had the chance to look at the
actual bill. Cyber security, obviously, as we all know, is a
really important issue. It has, of course, many dimensions; the
grid and the energy infrastructure being one of them. The
Department of Energy has created a cyber security initiative
and there is a roadmap as well. I have not had the chance to
review that in detail, but I will be delighted to work with you
on cyber security issues, because I think it is a really,
really important issue.
Senator Murkowski. We certainly would concur with that.
Another issue that the Chairman and I have been working on
are Small Modular Reactors, the nuclear reactors. Give me your
thoughts, your perspective. Do you believe that the SMRs are a
viable source of energy for our electricity grid and for
applications off the grid?
Mr. Majumdar. Senator, I absolutely do. I think this is--
there is a global competition going on in nuclear power,
nuclear energy and this is a way to move forward. I think we
should move forward very aggressively in this.
Small Modular Reactors, as you know, is a way to be able to
finance nuclear power plants in a way that is difficult to do
if it is a really large plant. Modularizing it, in many ways,
could potentially reduce the cost of nuclear or electricity
from nuclear power, which has to compete with natural gas
electricity which, today, is the cheapest. So I think it will
enable to do that.
But as I mentioned, there is a global competition going on,
and I think we need to move really fast to be able to take the
technological lead in the world. As you know, we have, the
President has requested that from the FY11 and FY12 budget, and
as soon as that budget is approved, we can have a new start. We
will launch and put our efforts in getting the SMR issue
resolved as quickly as possible.
Senator Murkowski. I think we also recognize that when we
are talking about what the prospects may hold for the SMRs, one
of the stumbling blocks that we encounter is how we dispose of
the used nuclear fuel and the radioactive waste. So that is
something that, clearly, we need to address.
Do you have any thoughts in terms of how we can better
advance that discussion?
Mr. Majumdar. I mean as we all know, this is a really
serious issue because if we cannot handle the nuclear waste, we
have a real problem in the Nation in the long term.
The Secretary of Energy decided when he came in to put
together the Blue Ribbon Commission, and the Blue Ribbon
Commission has come up with a first draft of the report, and
made several recommendations including legislative ones. The
final report is going to come out in January of next year, just
a month away, and I think it will be premature for me to say
anything before the final report comes out, but we are studying
the preliminary report very, very carefully.
So I think before that report comes out, it will be very
difficult for me to say anything, but I think this issue is a
really important one which, as a Nation, we need to resolve
very quickly.
Senator Murkowski. Thank you, Doctor. Thank you, Mr.
Chairman.
The Chairman. Senator Wyden.
Senator Wyden. Thank you, Mr. Chairman.
Doctor, without making this a bouquet tossing contest, let
me also say I am very appreciative of the good work that you
have been doing. Because you have been doing such good work, we
have high expectations for you and you are going to get little
tougher questions----
Mr. Majumdar. Thank you, sir.
Senator Wyden. Both today and in the days ahead.
As I have indicated to you, with millions of Americans
getting clobbered by skyrocketing energy prices, I want to see
the administration put more of a focus on the question of
energy affordability and energy sources being affordable for
our people at a time when they are just getting hit so hard in
the economy. Let's use natural gas exports as a question to
kind of give your sense to us today how you are going to
approach it.
As you know, until recently, we have been talking about
importing natural gas. Now we are looking at exports. We are
excited about the promise of natural gas. I have been a strong
supporter of natural gas. At the same time, there is a real
question about what is ahead in terms of the prices. The prices
in the Asian market are 3 and 4 times the price here and export
terminals are going to siphon off natural gas produced here to
the highest bigger.
Now, when we had Chairman Bingaman's earlier hearing, we
talked about the Department saying a 10 percent increase could
be in the public interest. Since that standard, we have had a
5-fold increase in the amount that was being considered for
export, and now it is even higher than that. To date, DOE has
either approved or is pending LNG export applications for 7
terminals for almost 10 billion cubic feet of natural gas a
day. That is like 15 percent of U.S. total demand.
So my first question is: at what price is the Department
going to conclude that the impact on our consumers and our
businesses is not going to be in the public interest? Tell me
how you are going to approach that question because your future
colleague, when you are confirmed, frankly did not give me much
of an answer. He said, we're doing lots of studies, and we've
got contractors, and the like. But if you are, as I say,
getting shellacked with these high energy prices, Americans
want a better answer than that. So tell us how you would
approach it.
Mr. Majumdar. Senator, first of all, I share your concern
about the affordability of energy whether it is electricity or
gasoline or others. I can tell you what we did in ARPA-E. This
is something that we take very seriously.
We launched DOE-wide, the SunShot Initiative, as you know,
to reduce the cost of electricity production from solar down to
5 cents a kilowatt hour so they can survive without subsidies.
The same thing for battery technology for electric vehicles to
reduce the cost of electric cars, and go 300 miles, and be
cheaper so they can compete without subsidies. That has been
the way that we have approached energy technologies to make it
even harder for the scientists and engineers to innovate.
With respect to LNG, I think in the approval of the
permits, we are, and what we have done in the past is take one
at a time in a case by case basis, and we do market analysis
for that to see whether that particular one will affect the
natural gas prices, which depends on a combination of supply,
demand, exports, et cetera.
Frankly if I, you know, your question is how would I
approach this? I would approach it as looking at whole market
global analysis to see at what point does LNG, given the
dynamics of the supply and demand and the export, at what point
will the LNG export start changing the prices? If it changes
too much, I do not think, and I share your concern, that this
should not be, you know, we will look at it again. I would love
to work with you, if confirmed, on this particular issue.
Senator Wyden. You are giving a better answer than your
future colleague did a few weeks ago, and we will be following
up with you, because I think we need to know. Obviously, there
are a host of issues that go into how you put your arms around
it. We need to know that the Department is going to be more
aggressive in defending Americans from these escalating prices.
I consider that one of the areas where the administration needs
to have a much more vigorous approach.
Let me get one other question in, if I could, Mr. Chairman.
It is on something we all care about on this committee and that
is energy storage.
This is one of the real breakthrough opportunities because
the other side of the coin of promoting renewables. As you
know, solar and wind, these are intermittent sources and there
is a real opportunity to create good paying jobs, make energy
more affordable.
It has been hard to get the administration to put together
a real roadmap from moving forward in energy storage. In other
words there is a role, obviously a dramatic role, for the
private sector, and we want to see how the Government can
complement it.
What can you do to help us promote that? You have already
invested, made some good investments at ARPA-E. But what more
can be done to get a real roadmap in place for an energy
storage strategy for the country?
Mr. Majumdar. Senator, that is a very fair question. Let me
tell you what we are doing within the Department of Energy. You
know, there are a lot of questions about what is going on at
the Office of Science, what is going on in ARPA-E investment
that you talked about, what is going on in EERE in the battery
vehicle technology program?
One of the first things that I did as an Acting Under
Secretary is to look at it holistically because there is all
battery basic science going on in this, in basic energy
science, et cetera. Formed an integrated team, integrated
technology team on batteries and electrification to make sure
that, again, that 1 plus 1 plus 1 is greater than 3 so that the
whole is bigger than the sum of the parts. We have formed this
team.
This team has come together, just like the SunShot, which
is also a holistic team effort from the whole of DOE that we
launched. The same thing is happening in electrification
batteries to create a roadmap. In fact, we have had several
workshops, one of them is what is called, just like you are
proving with SunShot, a penny a mile. So if you are going to go
to 40 miles on an electric vehicle, and pay only a penny a
mile, that is about $125 a kilowatt hour on a battery, and
today it is not far from that.
The question is can we get a penny a mile by the end of
this decade? If we can do that, U.S. will be competitive in
battery technology and electrification. So that is the--now the
question is if we are to get that, which is a bold goal, what
is the roadmap? That is what we are coming at today.
I would be happy, I would like to work with and to sort of
engage in this discussion of what should be the national
roadmap for battery technology?
Senator Wyden. My time has expired. I just would like to
work with you on making sure we can pin down an understandable
plan for how the private sector can be involved with
Government. Thank you, Mr. Chairman.
The Chairman. Senator Barrasso.
Senator Barrasso. Thank you very much, Mr. Chairman.
Doctor, congratulations.
I agree with Senator Wyden. We have great concerns about
energy affordability, and just a number of weeks ago, we met in
this room with Bill Gates and with others to talk about energy
affordability. I have concerns when the President was then a
Senator running for President. He said under his plan,
electricity rates would necessarily skyrocket. To me, I do not
think that bodes well for the country, and I have concerns
about all of the regulations that we are facing as a Nation and
the impact that they have on the cost and on energy
affordability.
In just over a week, the Environmental Protection Agency is
going to issue its final Utility MACT rule. By the EPA's own
estimates, the annual cost of compliance with the rule will be
about $11 billion. That is the annual cost of compliance, $11
billion. The EPA estimates the total savings from the mercury
reductions in the Utility MACT rule will amount to just over $6
million; that is opposed to $11 billion of the cost.
Some of the Nation's largest power producers have said that
they cannot comply with the rule in accordance with the EPA's
deadlines. Of course, the Utility MACT rule is just one of a
number of different forthcoming regulations on America's power
sector; these regulations are looming over them. There is
growing concern that perhaps the EPA's regulations will
actually affect not just the affordability, but also the
reliability of America's electric grid. So I wanted to get to
that issue with you.
Tuesday's Wall Street Journal published an editorial
entitled, ``If the Lights Go Out.'' That editorial discusses
the North American Electric Reliability Corporation's, NERC's,
2011 reliability assessment, which was recently published. In
that report they say, ``Environmental regulations are shown to
be the No. 1 risk to reliability over the next 1 to 5 years.''
NERC has also said, ``the nation's power grid will be stressed
in ways never before experienced.'' Somebody might ask, ``So
where is the Department of Energy on this?''
Unfortunately, I think the Department has been on the
sidelines. The DOE only decided to address the issue of
reliability recently. I think they have a 40-page study which
was released earlier this month, and I understand that this
study was only begun this past August. That is a year after a
FERC Commissioner raised concerns about reliability.
So as the senior advisor to the Secretary of Energy, the
American people want to know, will the lights go out? I'd be
interested in your thoughts on that study, where the Department
of Energy has been, and our reliability in terms of energy and
electricity?
Mr. Majumdar. So Senator, first of all, I could not agree
more about, with you, about the affordability of electricity. I
think we all agree that that is, (A), reduce the cost of energy
for our people. In fact, more so we have, that gives us a
competitive edge in terms of bringing back manufacturing in the
United States and creating jobs. I mean, that is something that
we all, I think, share. That that is we are losing that, and we
need to bring that back, and energy cost is a big issue in
that.
So all the things, as I mentioned, all the things that we
have done, for example, in my real job, the one hundred percent
job that I have is ARPA-E, is to look for technologies to
reduce the cost of electricity and provide options for the
Nation whether solar electricity or wind. We have invested in
drilling technology to reduce the cost of geothermal, and this
is a combination of laser and drill bits so that you reduce the
cost of drill bits for that. The cost of nuclear energy, that
is the Department of Energy is trying to do; that is the SMR
part. All to reduce the cost of electricity down to about 5
cents a kilowatt hour, and have them compete, and give options
for the Nation.
Now, the question about the EPA one that you are talking
about, yes, we did a study. If you look at the conclusion, this
is a very macroscopic study. The question is: would the grid be
reliable or not? The grid has many problems whether you get a
hurricane, or whether you have an ice storm in the Northeast
has issues. That is a very major issue for our Nation that we
need to address.
With regards to the EPA, as I said, the study looked at
whether we have the adequate resources to be able, on a
macroscopic gross scale. The answer is yes, we possibly have
those resources. What it has not done is to look for individual
plans, and that is a business decision that the utilities would
have to make.
What we will do in DOE, if confirmed, is to put together, I
will commit to you, to put together a team and we are actually
putting that together right now, to help the utilities, and all
the PUCs, and the stakeholders to make sure that the grid
remains reliable. That is the role of the Department of Energy.
Senator Barrasso. I appreciate your comments, and Bill
Gates said exactly what you said in terms of being a
competitive economy and having manufacturing opportunities. Low
cost electricity is a big part of that.
Following up on that in terms of energy affordability,
coal: available, reliable, secure source of energy and clearly
affordable energy. So I am wondering about EPA is unprecedented
steps that seem to be aimed at eliminating coal fired electric
generation in this country.
What steps are you going to take to ensure that coal fired
electric generation still has a bright future in this country
for affordable energy?
Mr. Majumdar. Senator, as you know, we have the world's
largest reserves of coal, and we should be using it in an
environmentally responsible and affordable way. I mean, that is
just my philosophy of this.
We have, in my work at ARPA-E, we have developed programs
to reduce the cost of carbon capture down to below the price of
carbon dioxide in the market, so that there is actually
business opportunity in carbon market. Since we do not have a
carbon price, it is decided by enhanced oil recovery.
So if you could reduce the cost of carbon capture below the
price, you could then sell it for enhanced oil recovery, so
that we can use domestic sources of oil. We have roughly about
80 billion barrels of oil stuck in the rocks onshore. That will
address, also, national security and oil imports issue. So this
is a carbon capture, utilization, and sequestration, which will
affect, which will positively impact both the coal, electric
energy from coal, as well as our oil imports.
Senator Barrasso. Thank you, Mr. Chairman.
The Chairman. Senator Sanders.
Senator Sanders. Thank you, Mr. Chairman. Welcome, Dr.
Majumdar.
I happen to believe that from a global warming perspective,
and energy independence perspective, and a job creating
perspective there is huge potential in terms of transforming
our energy system away from fossil fuel to sustainable energy
and energy efficiency.
Now the media has been talking a lot lately about
sustainable energy and some of the problems that have occurred,
but the truth is, as I suspect you know, the solar industry in
recent years has been thriving. We have doubled the number of
solar jobs in America since 2009. More than 100,000 Americans
today are working in the solar industry. The solar industry
grew at a rate of 69 percent annually in the last year, and it
is one of the fastest growing industries in the United States,
creating jobs all over this country. In fact, the cost of solar
panels has fallen 30 percent over just the last 2 years.
Wind is also exploding. Quite incredible. Texas alone has
more than 10,000 megawatts of wind energy installed, equivalent
in capacity to 10 nuclear power plants; 10 nuclear power plants
in Texas alone. Iowa, 20 percent of their electricity is
generated from wind.
So my question to you is when you become Under Secretary,
what are you going to be doing to significantly expand the role
of sustainable energy in this country?
Mr. Majumdar. Senator, first of all, I could not agree more
with you about the role of solar and sustainable sources of
electricity because (A), I think it is good for the
environment. Second, it is a huge, trillions, multitrillion
dollar world market.
In terms of solar, as you know, we launched the SunShot
Initiative which brings together, internally within the DOE,
the resources in the Office of Science, and energy efficiency,
and renewable energy, and ARPA-E. The power electronics effort
from ARPA-E fits into that and that is why we created a program
on Solar ADEPT. That is all to reduce the cost of solar so that
we can be competitive.
Senator Sanders. Doctor, would you not, in recent years,
the cost of solar panels has plummeted. Do you believe with new
technology and new research that we can continue the decline of
price in solar to make it competitive with the more, the older
and more mature technologies?
Mr. Majumdar. Yes. The cost of solar, the cost of
electricity, the price will be determined by the market. But
the cost of production of electricity from solar is going down
to the point that it is, in some parts of the country, it is
already competitive. But if you look ahead in a few years from
now, it will be competitive in large parts of the Nation.
So, I think that is the question really would be then: is
the integration of the solar onto the grid? That is one of the
challenges that we have.
Senator Sanders. Which takes me to my next question and
that is an issue I know that you have been working on, we
worked with you on, but the concept of the smart grid and
sustainable energy. Could you say a few words on that?
Mr. Majumdar. I think if you look at the grid today as a
whole, if you just step back for a moment. Many of the assets,
there were trillions of dollars of assets on our grid. The
average age of a transformer on a grid is 42 years. It is 2
years beyond its lifetime. We buy most of our transformers from
overseas, and there is a backlog behind it. That transformer is
not that different from what Nikola Tesla invented in the
1890s. We have not really taken that quantum leap.
That is why we created a program in ARPA-E called On Power
Electronics, which uses silicon carbide-based transistors, and
which operates at much higher frequency, reduces the size.
Something which is today 10,000 pounds will be 100 pounds in
the future. By the way, we are the biggest manufacturers of
silicon carbide in the world. That is a competitive advantage,
so leveraging that. I think that is the kind of quantum leap
that we need to take, and that is what we are trying to do
right now.
Once you make that and you have put that in these smart
devices, which are cheaper, lighter, and smarter into the grid,
then you look at the whole system as a grid. On one end, you
have the smart meters in the homes, et cetera. On the other
hand, you have these fluctuating supply from wind and solar and
base load. How do you take that whole system of transmission
distribution and manage it in a way that is reliable, that is
secure, et cetera?
Which is why in ARAP-E, we created a program called GENI,
which is the Green Electricity Network Integration to address
that. In the Office of Electricity, we have several programs
looking at the model. It is a very hard computational problem.
I will not go into the technical details.
Senator Sanders. Please.
Mr. Majumdar. But that is the kind of thing that we need to
take. Again, a quantum leap in our technologies, and
integrating that, and having the right policies.
Senator Sanders. I think that is very exciting. Say a very
brief word, and my time limit is expired, on the potential of
wind as you see it.
Mr. Majumdar. I am sorry, the potential?
Senator Sanders. On the potential of wind energy.
Mr. Majumdar. I think in many parts of the country when the
wind resources are clearly onshore, the cost of electricity
from wind is almost at the same level as electricity from
natural gas and sometimes cheaper.
The question is the offshore wind, and offshore is still
expensive. I think we need to put our resources to reduce the
cost of electricity from offshore wind, which is a huge
resource and make it reliable, because we cannot send ships out
there to be able to repair it every few years or so. So it has
to be extremely reliable and that, again, needs technology to
be able to do that. That is the kind of thing that we are doing
at the Department of Energy right now.
Senator Sanders. Thank you very much. Thank you, Mr.
Chairman.
The Chairman. Thank you very much. Senator Murkowski, did
you have additional questions?
Senator Murkowski. Just very quickly in following up from
my friend from Vermont who is always keyed-in and I appreciate
his focus on the opportunities with solar, and wind, and some
of our other renewable resources. The administration has
clearly put a focus on that, and I think we have seen some
gains there, which is important.
But can you discuss, just very briefly, the role that you
think that unconventional fossil fuels might play, such as
methane hydrates, which we believe in Alaska have enormous
potential, oil shale. Where do they fit into the picture?
Mr. Majumdar. Oh, I think we should look at all options.
There is not a silver bullet in this. In terms of
unconventional, shale gas is often considered--shale gas and
shale oil--are often considered unconventional. As you know,
the President asked Secretary Chu to lead an effort, a
multiagency effort, in trying to make sure that it is
environmentally responsible. I think that in the first draft of
the report came out, we are looking at that, and trying to get
together across the agencies to be able to address that.
But I think we need to address all our other natural
resources that we have, whether it is methane hydrates. There
is a project that we have in Alaska on that, and see what the
capacity is, whether we can extract it in a cost effective way,
and supply our Nation with affordable energy. I agree with you
on that.
Senator Murkowski. Thank you, Mr. Chairman. I look forward
to working with you, Doctor.
Mr. Majumdar. Thank you.
The Chairman. Senator Coons had wanted to ask a question,
but had to go to another hearing himself. So we will go ahead
and conclude the hearing, and advise all members that they will
have until 5 tomorrow to submit additional questions for the
record.
Thank you very much, Doctor, for your testimony, and we
look forward to acting quickly on your nomination.
Mr. Majumdar. Thank you very much indeed.
The Chairman. That will conclude our hearing.
[Whereupon, at 10:20 a.m., the hearing was adjourned.]
[The following statement was received for the record.]
Hon. Harry Reid,
Majority Leader, U.S. Senate, 522 Hart Senate Office Building,
Washington, DC.
Hon. Jeff Bingaman,
Chairman, Energy and Natural Resources Committee, 703 Hart Senate
Office Building, Washington, DC.
Hon. Mitch McConnell,
Minority Leader, U.S. Senate, 317 Russell Senate Office Building,
Washington, DC.
Hon. Lisa Murkowski,
Ranking Member, Energy and Natural Resources Committee, 709 Hart Senate
Office Building, Washington, DC.
Dear Senate Majority Leader Reid, Minority Leader McConnell,
Chairman Bingaman, and Ranking Member Murkowski:
On behalf of SME, I am writing to offer the endorsement of Arun
Majumdar for the nomination of the Under Secretary of Energy at the
U.S. Department of Energy. Our nation's ability to compete at a global
level in the field of energy technology research will require visionary
thinking of the level that Dr. Majumdar would bring to this position.
During his time as the first-ever Director of the Advanced Research
Projects Agency-Energy (ARPA-E) Dr. Majumdar has demonstrated the
leadership traits, and skills, necessary for his nominated position.
Founded in 1880, ASME is a more than 120,000 member not-for-profit
professional society promoting the art, science, and practice of
mechanical and multidisciplinary engineering and allied sciences. ASME
also conducts one of the world's largest technical publishing
operations, holds more than 30 technical conferenes and 200
professional development courses each year, and has developed more than
500 industrial and manufacturing standards, many of which are
considered to be global technical standards. ASME has long believed
that the nation's ability to develop and maintain a balanced energy mix
is critical to the country's future economic growth.
As you know, ARPA-E was authorized under the bipartisan ``America
COMPETES Act'' (P.L. 110-69), but did not receive its first funding
until the ``American Recovery and Reinvestment Act'' (P.L. 111-5).
According to a recent report by The Breakthrough Institute, ARPA-E
investments now total $521.7 million in awards for 180 different
projects, which have attracted a cumulative $285 million in additional
private capital investment.
If confirmed, Dr. Majumdar will bring a lifetime of experience in
leading edge energy science, and research, to the position. Dr.
Majumdar has served on the advisory committee of the National Science
Foundation's engineering directorate, was a member of the advisory
council to the materials sciences and engineering division of the
Department of Energy's Basic Energy Sciences program, and was an
advisor or nanotechnology to the President's Council of Advisors on
Science and Technology. Additionally, Dr. Majumdar was the founding
chair of the ASME Nanotechnology Institute.
Dr. Majumdar is a recipient of the Institute Silver Medal, NSY
Young Investigator Award, ASME Melville Medal, the Best Paper award of
the ASME Heat Transfer Division of ASME, Gustus Larson Memorial Award
of the ASME, and Distinguished Alumni Award from IT-B. He is a fellow
of ASME and AAAS, and is a member of the U.S. National Academy of
Engineering.
I urge you to support Dr. Majumdar's confirmation. Should you have
any question, please do not hesitate to contact ASME Government
Relations Director Kathryn Holmes at HolmesK@asme.org or at 202/785-
3756.
Sincerely,
Victoria A. Rockwell,
ASME President.
APPENDIX
Responses to Additional Questions
----------
Responses of Arunava Majumdar to Questions From Senator Murkowski
Question 1. General Research Priorities: Given your time at ARPA-E,
what are the technologies that you believe offer the greatest future
potential for economic renewable energy development over the next
decade? What are you excited about right now? Beyond that, what are the
most appropriate stages of development for DOE to be focused on--
research, deployment, or a combination of both?
Answer. There are multiple technologies that offer great future
potential for affordable renewable energy development. A few examples
are given below:
a) DOE's Sunshot initiative is focused on reducing the cost
of electricity from solar energy to 5 cents/kWh within this
decade, so that clean solar electricity can be sold with out
subsidies and be cost-competitive with other sources.
b) Batteries that will enable electric vehicles have
comparable range and lifecycle cost as gasoline-based cars, so
that EVs could be sold without subsidies.
c) New low-cost drilling technologies that will make
geothermal energy cost-effective and competitive with other
sources of electricity
d) New approaches to use microbes for making cost-effective
and scalable renewable transportation fuels from domestically
produced electricity.
e) Plants engineered to directly produce infrastructure
compatible biofuels at high yield and low cost.
f) Electrical power management devices and systems for a
future reliable, resilient and secure electric grid that allows
for high renewable penetration.
g) Grid-scale electricity storage at a cost that is
comparable to pumped hydro and/or compressed air
h) New magnetic materials and motor/generator designs that
eliminate the need for rare earths
i) Energy efficient lighting, HVAC and whole building energy
management that can reduce energy consumption by 50% with a
payback period of less than 5 years.
The goal of DOE is to ensure a secure American energy future. This
includes national security, economic security and environmental
security. DOE has multiple roles to play in this regard. First, it
should fund research in basic science as well as research to translate
science into breakthrough technologies that are too risky for the
private sector, but if successful, could lead to technologies that will
make US globally competitive. Second, it must fund research for
innovations in manufacturing technologies, ones that reduce cost and
enable scaling within the US, and those that will make US globally
competitive in manufacturing. Third, DOE can use its ability to create
standards, such as appliance standards, that will lead to an energy
efficient economy and create a market for innovative technologies.
With regards to deployment, DOE's goal should be to catalyze and
enable industry and business, so that deployment can occur via
businesses that are sustainable in the long run. The DOE's funding
should be highly leveraged by the private sector both for manufacturing
and deployment of energy technologies.
Question 2. Nuclear Waste--How to dispose of used nuclear fuel and
highly radioactive waste remains a key stumbling block to the
development of new nuclear reactors. What do you believe needs to
happen to resolve this issue? Are used fuel recycling or fast neutron
technologies viable options?
Answer. Secretary Chu has determined that a proposed geologic
repository at Yucca Mountain is not a workable solution for the
disposition of used nuclear fuel and high-level radioactive waste. As
Secretary Chu stated in his February 11, 2011 letter to Co-Chairs
Hamilton and Scowcroft of the Blue Ribbon Commission on America's
Nuclear Future (BRC),
any workable policy to address the final disposition of used
fuel and nuclear waste must be based not only on sound
scientific analysis of the relevant geologies and containment
mechanisms, but also on achieving consensus, including the
communities directly affected.
The Department is committed to meeting the Government's obligation
to safely manage and dispose of our Nation's used nuclear fuel and
high-level radioactive waste. The BRC was established by the Secretary
to conduct a comprehensive review of policies for managing the back end
of the nuclear fuel cycle and provide advice and make recommendations
on issues including alternatives for the storage, processing, and
disposal of civilian and defense used nuclear fuel and high-level
radioactive waste. The BRC issued their draft report on July 29, 2011.
The BRC's final report is expected by the end of January 2012. The
Department will carefully review and evaluate the final findings and
recommendations of the BRC The Department is evaluating integrated fuel
cycle system options as part of its Fuel Cycle Research & Development
Program. Some of these options include used fuel recycling and fast
neutron reactor technologies.
Question 3. EMPs--As we consider cyber security issues, what has
DOE done to counter threats from electro-magnetic pulses, natural or
man-made? Should EMP protections be included in cybersecurity
legislation? Do we have enough information on how an EMP attack would
work to protect our electrical grid, or mitigate the damage?
Answer. There is a distinction between Electromagnetic Pulse (EMP)
weapons and the naturally occurring phenomena known as Geomagnetic
Disturbance (GMD) that is caused by solar storms. The Department of
Energy (DOE) is aware of this naturally occurring phenomena and the
potential risk to the Nation's electricity generation and supply. We
also are aware of the threat posed by EMP weapons.
DOE is working with agencies across the Federal Government as well
as industry leaders in identifying protection and mitigation
strategies. The Department has partnered with the Federal Energy
Regulatory Commission, the Departments of Homeland Security and
Defense, and Oak Ridge National Laboratory to develop these strategies
specifically in response to GMD. DOE has also co-sponsored the High
Impact/Low Frequency Event Workshop with the North American Electric
Reliability Corporation (NERC) to further address these risks. The
Department is also working closely with industry owners and operators,
the National Aeronautics and Space Administration, the National Oceanic
and Atmospheric Administration, the United States Geologic Service and
our National Labs to enhance early warning capabilities and advanced
modeling and simulation to more accurately project the time, location
and effects in the event of a GMD incident.
NERC is addressing the availability and adequacy of spare
transformers and has created a Spare Equipment Database Task Force and
a Task Force on Geomagnetic Disturbances. Several transformer
manufacturers including ABB, Siemens, Prolec-GC, Mitsubishi and EFACEC
are participating in these initiatives. Additionally, DOE has been
working with the Department of Homeland Security, the Electric Power
Research Institute and ABB on a Recovery Transformer Project. This
project is testing units that are lighter and more easily transportable
than existing transformers.
EMP is only one aspect included in the High Impacts Low Frequency
events that the electric sector is addressing. An EMP attack would
affect other sectors beyond the electric sector. Comprehensive
legislation on EMP, standard setting, research, and protection/
mitigation should be separate and comprehensive across all the affected
sectors.
Question 4. Cyber Security--This spring, the Committee reported out
S. 1342, The Grid Cyber Security Act, on a bipartisan basis. The bill
takes an electricity-sector approach to the issue of cyber security,
tasking DOE to respond to imminent threats and FERC, through the ERO
stakeholder process, to respond to emerging vulnerabilities. What are
your thoughts on the legislation: do you believe Congress should
proceed on a sector-specific basis like S. 1342 or via a governmentwide
approach? If Congress decides to address cyber security government-
wide, presumably under the auspices of the Department of Homeland
Security, what role do you see for the Energy Department? What role do
you see for FERC and for the ERO stakeholder process? How does DOE
interact with DHS on cyber-related matters now? Should Congress proceed
on a sector-specific basis like S. 1342 or via a governmentwide
approach?
Answer. DOE supports the Administration's cybersecurity legislative
proposal. Recognizing the interdependencies between different sectors
and the unique cybersecurity challenges associated with the reliable
delivery of electricity (e.g., high availability and low latency
communications), we believe it is important to have a comprehensive,
government-wide approach to cyber security.
Question 4a. If Congress decides to address cyber security
government-wide, presumably under the auspices of the Department of
Homeland Security, what role do you see for the Energy Department?
Answer. DOE supports a strategic comprehensive approach to enhance
cybersecurity for the grid.In September 2011, DOE released the updated
Roadmap to Achieve Energy Delivery Systems Cybersecurity to provide a
collaborative strategy for improving cyber security, prioritizing cyber
security needs, and focusing actions under way throughout Government
and the private sector to secure control systems. The Roadmap vision is
focused on resilient energy delivery systems that are designed,
installed, operated, and maintained to survive a cyber incident while
sustaining critical functions. The Roadmap strategies are also fully
integrated into the Energy Sector-Specific Plan. DOE uses the Roadmap
to focus its activities on the following key areas: public-private
partnerships to accelerate Energy Sector cybersecurity efforts;
research and development of advanced technology to create a secure and
resilient energy infrastructure; cybersecurity standards to provide a
baseline to protect against known vulnerabilities; facilitating timely
sharing of relevant and actionable threat information; risk management;
incident management and response; and development of a highly skilled
and adaptive workforce.
Due to the unique cyber security challenges of the electric grid,
DOE has worked closely with its national laboratories, utility
partners, and control system vendors to develop advanced technology
solutions to secure the grid. The real-time cyber control of physical
power systems and the highly interdependent nature of the electric grid
with other critical infrastructure, creates a unique challenge that
requires specialized technical knowledge that is present in DOE's
Electricity Delivery and Energy Reliability cyber programs. With the
development of Smart Grid, which is accelerating and expanding the use
of digital devices that control the grid, DOE's role in developing and
coordinating cyber security solutions has become more important.
Under Homeland Security Presidential Directive 7 (HSPD-7), DHS is
responsible for leading, integrating, and coordinating the overall
national effort to enhance critical infrastructure and key resources
(CIKR) protection, and is also a focal point for the security of
cyberspace. HSPD-7 also designates DOE as the sector-specific agency
(SSA) for energy responsible for collaborating with all federal
agencies, state and local governments, and the private sector.
Question 4b. What role do you see for FERC and for the ERO
stakeholder process?
Answer. Under the Energy Policy Act of 2005 (EPAct 2005), FERC
promulgates and enforces reliability standards for the bulk electric
system. FERC designated the North American Electric Reliability
Corporation (NERC), as the Electric Reliability Organization (ERO) with
the responsibility to develop technical standards associated with the
reliable operation of the bulk power system.
Question 4c. How does DOE interact with DHS on cyber-related
matters now?
Answer. DOE coordinates with DHS in accordance with HSPD-7. Given
the interdependencies among sectors and reliance on the electric
sector, DHS is a strategic partner for DOE. DOE interacts with DHS
regularly on cybersecurity initiatives through both formal and informal
means. Some examples include:
The Roadmap to Achieve Energy Delivery Systems
Cybersecurity.
DOE, in coordination with DHS and other Federal agencies,
has conducted several cyber threat information sharing
workshops to analyze classified information, determine the
impact to the sector, and develop mitigations that were
specifically designed to work in the sector.
DOE, in coordination with the National Institute of
Standards and Technology (NIST), DHS and NERC, is leading a
collaborative effort with representatives from across the
public and private sectors to develop a cyber security risk
management guideline. The objective of this effort is to
provide a consistent, repeatable, and adaptable process for the
electric sector, and enable organizations to proactively manage
risk.
Critical Minerals
Question 5. I often say that minerals are the building blocks of
our society--especially for clean energy and other advanced
technologies--and yet, our dependence on foreign suppliers continues to
grow more and more severe.
Question 5a. Would you agree that the United States needs an
effective, holistic policy to promote the responsible production of
critical minerals and a strong supply chain?
Question 5b. If we refuse to produce minerals here at home, what do
you think that will mean for manufacturers' ability to obtain the raw
materials that go into their products?
Question 5c. As Under Secretary, I expect you'll be involved in the
Department's updated critical minerals strategy. Will the update
include the Department of the Interior? Will you look at permitting and
other issues that need to be addressed if we're going to be successful
in this area?
Answer. Yes, policies focused on the development of a robust
domestic critical material supply chain will be an important component
for strengthening American industries. To accomplish this DOE is
focusing on three pillars to address the challenges associated with
critical materials in the clean energy economy. These three pillars
form the basis of an effective, holistic policy. First, substitutes
must be developed. Research and entrepreneurial activity leading to
material and technology substitutes improves flexibility to meet the
material demands of the clean energy economy. Second, recycling, reuse
and more efficient use can significantly lower global demand for newly
extracted materials. Research into recycling processes coupled with
well-designed policies will help make recycling economically viable
over time. Finally, diversified global supply chains are essential. To
manage supply risk, multiple sources of material are required. This
means encouraging other nations to expedite alternative supplies and
exploring other potential sources of material in addition to
facilitating environmentally sound extraction and processing here in
the United States. With all three of these approaches, we must consider
all stages of the supply chain: from environmentally-sound material
extraction to purification and processing, the manufacture of chemicals
and components, and ultimately end uses.
Production within the United States is important for at least two
reasons. First, the United States' considerable reserves of some
critical materials could add significantly to total global production
and to greater diversity in the global supply of these materials.
Second, U.S. technology and best practices developed during mine
operations can help promote safe and responsible mining in other
countries, further contributing to supply diversity and the sustainable
development of resources.
In the past six months, DOE and interagency colleagues have had
several conversations with the Department of Interior concerning
critical materials, in updating our Critical Materials Strategy and
otherwise. Among the topics addressed have been general and specific
permitting issues. DOE intends to continue these conversations.
Question 6. I know you have visited Alaska's lone working
geothermal project at Chena Hot Springs, and I thank you for taking the
time to visit my home state two summers ago. My question is what do you
feel that DOE should be doing to further geothermal development
nationwide? The program has been concentrating on enhanced geothermal
system research and on geothermal heat pump technology. But what other,
if any, areas are you interested in focusing Department assistance on,
especially given the likelihood of declining funding for all renewable
energy and energy efficiency projects in future years?
Answer. It is critical that the Nation continue to develop its
geothermal resources. The program should be developing replicable
exploration tools that today's industry can use to reduce uncertainty
and risk regarding the quality of this base load renewable resource
prior to committing to costly exploration and drilling. This would be
analogous to what the oil and gas industry has done to reduce resource
uncertainty. The U.S. Geological Survey estimates that there are still
30 GW of undiscovered hydrothermal resources; ten times today's
installed capacity, plus significant additional potential which could
come from success in developing enhanced geothermal systems. With
successful DOE-sponsored development and demonstration of advanced
exploration technologies (e.g., seismic, magnetic, optical, etc.) that
more accurately characterize the resource, we help tackle another
critical barrier to geothermal power growth--affordable financing. With
reduced risk and cost, the private sector will be more willing to
provide financing at affordable rates, leading to an expansion of the
geothermal industry.
Question 7. As you prepare now your FY 14 budget, since the FY 13
budget submission should be all but finished, I would encourage you to
consider funding to provide additional grants under Section 625 of the
Energy Independence and Security Act of 2007. That provision set up a
matching grant program for high-cost geothermal projects nationwide. I
happen to think geothermal has significant upside for supplying
baseload power, if the high initial capital costs can be reduced. What
is your view on the technology's future efficacy, and where it will fit
in your personal priorities for DOE funding when building a budget for
renewable energy for submission to the President and Congress?
Answer. Geothermal Energy plays a vital role in our Nation's energy
mix, and it has the potential for further growth. The Geothermal
Technologies Program funding is focused on those technologies which
have the greatest potential to help realize this opportunity. In the
likelihood of declining budgets, we believe that investment in research
and development will provide the maximum rate of return on taxpayer
investment as compared to more expensive, location-specific
demonstration and deployment. The EISA 625 grants are for design,
engineering and commercial applications which can be done by the
private sector. It's also imperative that we help develop solutions for
Americans who are paying excessive costs for energy, especially those
who are relying on high-priced diesel to produce electricity. This
situation is further compounded by additional fuel transportation costs
for those living in remote areas such as Alaskan villages. In
consideration of these factors in high-cost areas, the DOE Geothermal
Technologies Program (GTP) has included EISA Section 625 as a special
program policy factor in its funding opportunity solicitations. While
we have not awarded EISA 625 grants per se, there have been five
projects selected in high-cost areas of the State of Alaska (one is
currently being negotiated). These projects include:
------------------------------------------------------------------------
Awardee Title DOE Funding
------------------------------------------------------------------------
Hattenburg, Dilley, and Identifying Fractures $ 313,858
Linnell, LLC with Geochemical
Techniques
------------------------------------------------------------------------
Hattenburg, Dilley, and Methodologies for $ 331,174
Linnell, LLC Reservoir
Characterization
Using Fluid Inclusion
Gas Chemistry
------------------------------------------------------------------------
University of Alaska Pilgrim Hot $4,274,792
Springs(Innovative
Exploration
Technologies)
------------------------------------------------------------------------
Naknek Electric Association Implementation of a $12,376,568
Demonstration EGS
Project at Naknek,
Alaska
------------------------------------------------------------------------
The Trabits Group Development of an $2,154,238
Improved Cement for
Geothermal Wells
------------------------------------------------------------------------
The Office of Energy Efficiency and Renewable Energy has assigned
an expert, Dr. Brian Hirsch, from the National Renewable Energy
Laboratory, to assist the Denali Commission, Alaska Energy Authority
and other State agencies and organizations in developing resources such
as biomass, wind, hydro, and marine, as well as geothermal. We plan to
continue this project and policy support as Alaska embarks on achieving
15% energy efficiency improvement by 2020 and 50% renewable energy
generation by 2025. Achieving these goals will help make electricity
more affordable and decrease the price volatility associated with the
diesel market. Based on recent discussions with the Alaska Governor and
Lieutenant Governor, the state of Alaska and DOE are considering a more
formal relationship through a Memorandum of Understanding and DOE will
continue Dr. Hirsch's efforts and possibly expand support.
Question 8. Coming from Alaska, I am a big supporter of wave,
current, and tidal power. I think over the long-term, marine
hydrokinetics offer considerable upside for low-cost renewable energy
so I support the Department providing a majority of the water power
budget to marine hydrokinetics. At the same time, I think there are a
whole host of ways that we can still get more lower-cost renewable
energy from conventional hydropower projects with additional government
assistance--not just incremental hydropower. What is your view as to
how the Department should be spending its water power budget, and what
are your priorities for the future?
Answer. The Department believes that continued funding of research
and technology development projects for both conventional hydropower
and emerging marine and hydrokinetic (MHK) energy technologies is
needed to meet the nation's immediate and long-term energy needs. The
President's request includes $38.5M for marine and hydrokinetic and
conventional hydropower technologies. The President's request is
essentially split between these two technology areas. The Senate
appropriations mark eliminates conventional hydropower activities.
Conventional Hydropower Opportunities
The Department agrees that there are significant opportunities to
increase electricity generation by optimizing existing hydropower
facilities, adding power to non-powered dams, and developing new
(small) hydropower. The nation's current hydropower fleet is aging, and
many facilities have not been upgraded in decades to take advantage of
modern technologies. The Department works to remove market barriers by
developing technology for efficiency upgrades to encourage investment,
and to remove environmental barriers by demonstrating technologies such
as the fish-friendly Alden turbine. Also, the Department's assessment
of non-powered dams found that there is potential to add more than 12
GW of hydropower capacity by powering existing nonpowered dams.
In addition to supporting research to make use of opportunities at
existing dams, the Department supports activities to harness new energy
resources such as small hydropower and pumped storage hydropower. To
this end, in FY2011, the Department selected 11 multi-year projects to
develop innovative small hydropower technologies and two projects to
deploy state-of-the-art pumped storage hydropower technologies, which
can help in integrating high penetrations of variable renewable energy
into the electric grid. The Department is also undertaking an
assessment of opportunities to develop new hydropower facilities across
the United States.
Marine Hydrokinetic Opportunities
The Department's current MHK priorities include ongoing R&D
activities targeted at developing cost benchmarks and technology
pathways to cost-competitiveness for MHK technologies. There are also
activities addressing key environmental, siting, and market barriers
and a comprehensive set of resource assessments and detailed techno-
economic assessments for emerging MHK technologies.
The Department has recently concluded studies finding that the
technically recoverable resource potential is approximately 1,170 TWh/
yr for wave energy and 180 TWh/yr for tidal energy. This resource
potential represents about one-third of U.S. electricity demand.
Assessments of ocean thermal, ocean current, and river hydrokinetic
energy will be completed in 2012. The completion of these studies, in
addition to the results of demonstration projects and continued
research over the next decade will put industry in a position to offer
more cost competitive and reliable electrical generation options with
this nascent technology.
Question 9. While wind power is a wonderful source of supplemental
electrical energy in rural Alaska, nationwide I have the sense that
wind is an increasingly mature technology. What do you see as the
future for research into wind turbine technology and for integration of
wind into the electrical grid? In your view, should wind funding be
increased, decreased, or stay the same as a percentage of the
Department's renewable energy budget?
Technology Maturity of Land and Off-shore Wind
Answer. The DOE Wind program has been successful in enabling the
cost competitiveness of land-based systems which has gone from 0.1% in
2000 to over 2% by 2011 (42GW installed). With the success of the
land-based deployments, the Department is now prioritizing and shifting
a significant portion of the RD&D portfolio to off-shore systems. In
FY12, the President's budget reflects an increase to develop immature
off-shore systems to take advantage of high resource potential and
proximity to high population centers (4,000 GW potential), and to
enable land-based wind to be cost competitive with fossil sources on an
unsubsidized basis (noting that PTC expires at the end of 2012). In
addition, more work needs to be done to increase domestic manufacturing
of wind energy technologies and components throughout the supply chain.
Currently, four of the top ten (and seven of the top 15) leading global
suppliers of wind turbines in 2010 are from China, while only one U.S.
company, GE, is in the top 15.
Regarding offshore wind, there are currently 3 GW of offshore wind
technology installed worldwide, but none are installed in the U.S. For
the offshore wind industry to be viable in the U.S., a number of
technology hurdles need to be overcome. Current technology solutions
exist for shallow water in the 3-5MW range but to be cost effective
offshore technology must be scaled to the 8-10MW range and be able to
be deployed in deeper water. Developing the nation's offshore wind
energy resources could deliver substantial amounts of clean electricity
to U.S. consumers, especially in transmission-constrained coastal areas
with high energy costs, while creating thousands of jobs and
stimulating billions of dollars in new economic activity.
Future Research Investment
Further research is needed to harness the considerable market
potential for offshore wind energy in the United States, as described
in the National Offshore Wind Strategy released by the Departments of
Energy and the Interior in 2011. As the U.S. industry develops,
projects will presumably tap into the high wind resource potential
available in deep water locations. To address this need and support
this new industry, the Department is focusing on developing cost-
effective technologies for deep water floating offshore systems in
addition to exploring demonstration areas where technologies can be
showcased and evaluated. The increase in machine size for offshore
applications will require innovation in drivetrain topographies that
are lighter and more reliable; blade geometries that are larger (up to
100m), but lighter and capture more energy; and ''smart'' control and
health monitoring systems that not only optimize energy capture but
characterize and predict system behavior when system failures are
realized. The Department's recent funding opportunity awards in
offshore wind technology, innovative drivetrains, and market barriers,
totaling $50 million, are key to ensuring the success of this emerging
industry. Some of the specific technology research areas that DOE is
supporting to advance the offshore wind industry include marinization
of the structure and power electronics; moorings and foundations for
deepwater systems; and control systems that provide stability and high
efficiency for floating wind energy systems. DOE-supported R&D will
allow domestic wind technology developers and manufacturers to enter
the global market by leapfrogging further development of conventional
offshore turbine technologies and produce next generation designs
tailored to the unique conditions off the coasts of the United States.
While it is widely understood that achieving high levels of wind
energy penetration into the grid (upwards of 20%) is technically
feasible, issues related to project cost effectiveness, electricity
grid infrastructure and operations, and siting and environmental
concerns must be addressed, and they require government involvement.
These issues are increasingly more complicated in an off-shore
environment, where both the experience is limited, and technical and
market barrier challenges are more complex. Investments to reduce the
cost of wind power through technology development and improved
reliability are needed to bring wind power closer to unsubsidized
market competitiveness. Investments to reduce market barriers to wind
deployment are needed to allow wind plants to be sited in higher
quality (higher wind speed) resource areas, further lowering the cost
of wind and increasing market competitiveness. As the market
penetration of land-based wind energy has increased and the first U.S.
offshore wind plants are being planned, concerns associated with siting
projects--such as potential impacts on wildlife, civilian and military
radar systems, communities, and competing land and ocean uses such as
fishing and shipping--have also grown. The wind industry estimates that
planned projects representing tens of gigawatts of potential capacity
have been delayed or otherwise significantly impacted by these issues.
Wind Integration
DOE efforts to integrate wind energy into the electric grid are
coordinated between the Office of Electricity Delivery and Energy
Reliability and the Office of Energy Efficiency and Renewable Energy.
Regarding the integration of wind into the electrical grid, substantial
efforts are needed to improve the capabilities of wind turbines and
begin providing services that more closely resemble conventional
generation technologies.
These capabilities include a variety of active power controls that
allow the possibility for wind turbines to provide regulation service,
frequency response, improved voltage control, and a variety of other
ancillary services. Mitigation of wind variability through demand
response and energy storage also deserves serious investigation.
Analysis of existing storage systems and additional demonstrations
coupled to wind generation are required to generate reliable data.
Furthermore, more analysis studies are needed to better understand the
impacts of high penetrations of wind through additional wind
integration studies similar to the Western Wind and Solar Integration
Study and the Eastern Wind Integration and Transmission Study. These
types of studies help planners and system operators better understand
how wind energy's variability and uncertainty affect the power grid and
provide insights into issues such as what impact thermal unit cycling
has on wear and tear to those generators. Also, considerable research
is needed to help support the development of decision support tools to
aid system operators make more informed operational decisions. Finally,
substantial investigation is needed into power system dynamic behavior
under a variety of wind deployment scenarios. In rural areas or in
areas that have small electrical grids, wind energy can be stored or
integrated with other renewables (e.g., biomass, hydrogen, etc.) to
provide more continuous power.
DOE believes that the allocation of $126.9 million in the
President's FY2012 Congressional Budget Request for EERE's Wind program
is sufficient to address the wind energy R&D needs outlined above.
Question 10. Through the 2007 energy bill, Congress set up a
matching grant program to help fund the capital costs renewable energy
projects in high-cost areas like Alaska. While some have incorrectly
considered the program to be Alaska-specific, I believe it allows the
department to make grants to actually build wind, solar, geothermal,
marine hydrokinetic and some hydro projects nationwide--with funding
for lake tap hydro projects clearly being limited to just Alaska. What
is your view about the merits of DOE providing financing assistance to
actually build renewable energy projects? Will you seek to dedicate
some portion of the Department's future budget to implement grant
funding for such projects as Under Secretary?
Answer. Section 803, titled ''Renewable Energy Deployment,'' of the
Energy Independence and Security Act (EISA) allows 50:50 cost share of
renewable energy construction grants. To date, the Department has not
requested funding for Section 803. In the likelihood of declining
renewable energy technology development budgets at DOE, we believe
that, in general, investment in research and development will provide
the maximum rate of return on taxpayer investment as compared to more
expensive, location-specific demonstration and deployment projects. The
total R&D budget for renewable energy is approximately $600M annually.
Even if this amount were matched by private cost share, it would be
dwarfed in comparison to what is invested in building renewable energy
projects with other policy incentives. However, the Department will
look to sponsor special demonstration projects where applying this
authority to validate new technology performance and economics in high
cost areas could spur follow-on private investment and be replicated at
scale.
Some of the other Federal government incentives and financing
opportunities for commercializing new technologies and for constructing
renewable energy plants include the DOE and USDA loan guarantee
programs, Modified Accelerated Cost Recovery System depreciation
schedule, production and investment tax credits and the Treasury grants
in lieu of tax credit program. For example, under the American Recovery
and Reinvestment Act, the Section 1603 Treasury grant program has
incentivized over 24,000 projects yielding over 14 GW of renewable
energy and $33 billion in total renewable energy investment by the
government and private sectors. As the Treasury grant program and tax
credits expire, the DOE looks forward to working with Congress and
other government agencies to determine the best policy mechanisms and
existing authorities to offset capital costs and to incentivize private
investment in building new renewable energy projects.
Question 11. Both the Government Accountability Office and the
Department of Energy's Inspector General have raised serious concerns
regarding the management and effectiveness of the Weatherization
Assistance Program. While clearly energy efficiency is a critical tool
to reduce energy bills, what will you do to improve the program? Do you
believe it has fundamental problems that can be solved?
Answer. More than $5 billion has been administered through Recovery
Act funding of the Weatherization Assistance Program (WAP). The use of
these funds to weatherize low income homes has been the subject of 28
audits covering grantees representing $3.9 billion or 78% of the
Recovery Act portfolio by either or both of the Office of Inspector
General (OIG) and the Government Accountability Office (GAO). 17 of
these audits have been complete and 11 are currently in process.
Most of the completed audit reports (14 of the 17) contained either
no recommendations or standard recommendations to improve ''Controls''
and monitoring. Of the remaining three reports, substantive
deficiencies included evidence of substandard performance in
workmanship, initial home assessments, contractor billing, financial
management, and compliance with laws and regulations, including Davis-
Bacon and Historic Preservation issues. The latter issues were new to
all grantees, since the Recovery Act added them to the requirements. In
many cases these issues were identified prior to the OIG or GAO audits
by DOE monitoring and were being addressed.
Since the inception of the Recovery Act, DOE has taken its
management responsibility very seriously, designing and implementing a
robust monitoring system that could identify problems and take
corrective actions without relying on outside audits. This allowed DOE
to both systematically identify and respond to the new issues presented
by the large increase in funding for WAP. All of the WAP grantees have
been visited on a routine basis, with Monitoring Site Visits by DOE
program staff totaling 121 as of December, 2011. Any issues identified
are addressed until corrected.
DOE will continue to act responsibly and appropriately when
monitoring Recovery Act spending. Routine findings are regularly
reviewed and used to identify areas of improvement among grantees.
Often, the WAP issues additional guidance to clarify or strengthen
policies. As in the past, DOE will remain vigilant in our awareness of
potential fraud or abuse of services.
Question 12. ``Duplicative Authorizations-- Over the years,
Congress has authorized numerous programs at the Department of Energy
that can be considered overlapping or duplicative. Has DOE considered
any kind of consolidation of programs that may be duplicative? Is that
something you would be willing to work with our committee on, if you're
confirmed as Under Secretary of Energy?''
Answer. DOE is working to ensure that its program areas are well
coordinated and have minimal overlap or duplication, in order to make
federal R&D funding have the highest possible impact. Recently,
building on the success of the SunShot program, DOE established a set
of cross-cutting technology teams to further this effort. These teams
are formed along techno-business lines (such as vehicle
electrification) and consist of the senior program managers from ARPA-
E, the Office of Science, and the applied technology programs that
oversee research that is relevant to each technology area. Working
closely with the Office of the CFO, these teams analyze the R&D
portfolio DOE-wide, to look for overlap, duplication, or gaps that may
not have been apparent when viewed on a program-byprogram basis. The
work of these teams is ongoing, and if confirmed, I would be happy to
work with the Committee on this important topic.
Question 13. There is confusion about DOE's current role in the
Energy Star Program. Can you please describe that role, and the
associated budget requirements?
Answer. DOE is the technical lead for the ENERGY STAR program
through its development of product test procedures and support of the
verification testing program. DOE remains committed to work with EPA
and stakeholders on creating and updating ENERGY STAR test procedures
that are reflective of innovations in the market place and address
manufacturers concerns with test procedures. As an example, DOE and EPA
are working closely with the Association of Home Appliance
Manufacturers (AHAM) and major refrigerator manufacturers in the
development of test procedures to support Smart Grid capability in
ENERGY STAR refrigerators. In FY2011, DOE's budget for ENERGY STAR was
$7 million to develop test procedures for ENERGY STAR and verify the
performance of ENERGY STAR labeled products through third-party
laboratory testing. The President's FY2012 budget request for ENERGY
STAR was $10 million to support those same to goals above and to work
with EPA and participating manufacturers, retailers, and energy
efficiency program sponsors on certification and product testing.
Question 14. Please describe how the DOE uses the procurement and
acquisition system to push energy conservation, and sustainability
within the DOE, and throughout the Federal Government.
Answer. As required by Executive Order 13514, DOE is ensuring that
95 percent of its contract actions include sustainable acquisition
clauses. DOE also purchases and establishes policies regarding
sustainable electronic equipment and energy efficient power management
practices, including EPEAT, ENERGY STAR and FEMP designated products.
In addition to these requirements DOE is making enhancements in its
Strategic Integrated Procurement Enterprise System contract writing
tool to ensure that contracting personnel can easily select the
appropriate green provisions and clauses for procurements to ensure the
Department's prospective contractors and successful competitors are
fully aware of DOE's commitment to sustainable acquisition.
Section 525 of the Energy Independence and Security Act of 2007
requires each Federal agency to procure ENERGY STAR qualified or
Federal Energy Management Program (FEMP) designated products in all
product categories covered by the Energy Star program or the FEMP
program, unless the efficient product is not cost-effective over the
life of the product or if no qualified product is reasonably available
to the agency. FEMP supports Federal agencies in identifying energy-and
water-efficient products that meet this and other Federal acquisition
requirements, conserve energy, save taxpayer dollars, and reduce
environmental impacts. This is achieved through technical assistance,
guidance, and efficiency requirements for energy-efficient, water-
efficient, and low standby power products.
FEMP product efficiency requirements set minimum efficiency levels
for product categories that have the potential to generate significant
Federal energy savings. FEMP dedicates staff and resources to inform
Federal buyers, procurement officials, energy managers, and facility
engineers of the reasons and requirements to buy energy-efficient
products. Several online and other resources are available to
facilitate product selection. Technical documents, fact sheets, and
web-based tools include covered product category efficiency
requirements, cost calculators, and the standby power data center. In
addition to online resources, FEMP staff works directly with Federal
agencies on a variety of issues, such as guide specifications, Federal
supply catalogs, outreach and training, and the Product Procurement
Working Group.
Question 15. Procurement Guidance: Please describe any guidance
that the DOE provides program managers and contracting officers on the
purchasing of sustainable or green construction services. Are there any
requirements prescribed that require the contracting officers to use
third party sustainability or green certification services in new
construction or through retrofits of existing buildings funded by the
DOE?
Answer. DOE provides guidance to program managers and contracting
officers in the area of sustainable acquisition, including sustainable
construction services, through several channels. Regulatory guidance is
provided through the Department of Energy Acquisition Regulation
(DEAR), part 923. The DOE Acquisition Guide (chapter 23) provides
comprehensive information concerning Executive Order 13514 and its
predecessors, responsibilities of various offices in DOE for meeting
the goals of the EO, and useful resources for both program managers and
contracting officers. The Department also maintains a Sustainable
Acquisition Working Group of over 200 members which shares information
and best practices in sustainable purchasing through quarterly
teleconferences for contractors and federal employees.
DEAR clause 952.223-78 Sustainable Acquisition Program (Alternate 1
for Construction Contracts and Subcontracts) requires a third party
sustainable/green certification to the Leadership in Energy and
Environmental Design (LEED) Gold level under the LEED rating system
most suited to the building type.
Question 16. Are federal agencies required to consult the Federal
Energy Management Program (FEMP) regarding efficiency opportunities
within new construction and the retrofit of existing buildings? For
example, if the DOD or GSA procures services to build a new facility or
retrofit an existing facility, are they required to consult with FEMP
on ways to incorporate energy efficiencies into the design and
construction of the building? If not, what role does FEMP play in
ensuring that these buildings are incorporating energy savings into
their designs?
Answer. Federal agencies are required to conform to efficiency
standards for new construction and major renovation as published by
FEMP through Federal Rule makings. Additional information on this
rulemaking is available at www.femp.energy.gov/pdfs/75_fr_29933.pdf
Agencies are also required to complete assessments of their
existing facilities to identify potential energy conservation measures
and report those findings to FEMP annually, per 432 of the Energy
Independence and Security Act 2007 (EISA 2007). This section required
FEMP to develop and manage an online tracking system, the EISA Section
432 Compliance Tracking System (CTS), to track agency performance of
energy and water evaluations, project implementation and follow-up
measures, and annual building benchmarking requirements. Because this
system is just now being implemented, we do not yet have data on agency
compliance.
In addition, Federal agencies are required by 548(a) of the
National Energy Conservation Policy Act (NECPA (42 U.S.C. 8258(a))) to
report annually to FEMP their energy management activities as detailed
in the Energy Policy Act of 2005 and EISA 2007. Information and data
collected from the agencies is then used to develop DOE's Annual Report
to Congress on Federal Government Energy Management.
In addition to reporting requirements, FEMP provides the services,
tools, and expertise to Federal agencies to help them achieve their
Federal energy management goals. This is delivered through project
financing, technical assistance, and communications and training.
Question 17. Please describe how FEMP analyzes energy management
authorities and develops rules and guidance to help Federal agencies
comply with applicable requirements.
Analyzing Energy Management Authorities:
Answer. The rulemaking process begins when DOE is directed by
Statute or by Executive Order to develop a rule or regulation or is
directed to develop guidance or interpretation of a rule or regulation.
When a law is enacted or an executive order issued relevant to FEMP's
scope of activity (e.g., dealing with Federal energy and water
management, fossil fuel consumption, or greenhouse gas emissions),
FEMP, working with other relevant DOE offices, as well as other
cognizant federal agencies (such as GSA, DOD and EPA), determine FEMP's
responsibilities.
Developing rules and guidance to help agencies:
Consistent with the Federal Register Act, the Administrative
Procedure Act, and other applicable legislation, DOE experts develop a
draft Proposed Rule consistent with the requirements and intent of the
governing authority. The draft Proposed Rule is then subject to an
interagency review process. Following that process, the draft is issued
as a Notice of Proposed Rulemaking (NOPR) in the Federal Register. The
NOPR provides a specified period of time usually 60 days--for all
interested parties to comment on the proposed rule. A public hearing is
typically held as well. Rulemaking documents, public comments and other
supporting materials are placed in a rulemaking docket which is made
available for public inspection at www.regulations.gov. After due
consideration of the public comments, modification of the proposed
rule, DOE publishes the final rule. The rule then becomes part of the
Code of Federal Regulations, and remains so until it is revised.
Upon completion of a final rule, DOE also develops guidance for
Federal agencies that are subject to the rules. This guidance expands
on the legal language used in the rules and addresses specific concerns
and issues agencies may have, as well as providing agencies direction
as to how to show compliance with the new rule. As needed, FEMP works
with DOE program offices, other federal agencies, national
laboratories, and industry experts to prepare the form and technical
aspects of guidance for complying with rules and regulations. Such
guidance typically covers both technical (e.g., energy, water, and/or
fossil fuel use) and cost-effectiveness based on life cycle costs and
published forecasts by energy Information Administration and National
Institute of Standards and Technology (NIST). NIST is responsible for
developing and maintaining a building life cycle cost model used by
federal agencies.
FEMP maintains a website containing information on the rulemaking
process at www.femp.energy.gov/regulations/notices--rules.html. FEMP
also maintains a website containing guidance for Federal rules at
www.femp.energy.gov/regulations/guidance.html.
Question 18. Is DOE the lead federal agency in ensuring that the
goals of Executive Order 13514 (Federal Leadership in Environmental,
Energy, and Economic Performance) of October 5, 2009 that relate to
energy are being met? Please describe how the DOE will ensure that all
federal agencies are reducing their energy intensity throughout their
building stock. If the DOE is not the lead within the Executive Order
as it relate to energy initiatives, who will be the lead federal agency
in ensuring that reductions in energy intensity throughout the federal
government are being met?
Answer. Each Federal agency is responsible for meeting the goals of
Executive Order 13514. However, the Federal Energy Management Program
within the DOE is responsible for tracking agency progress towards
meeting these goals and provides the services, tools, and expertise to
help them do so. This is delivered through project financing, technical
assistance, and communications and training.
Question 19. Please describe the role the DOE will play within the
Administration to ensure that the President's direction to federal
agencies to cut energy costs in agency facilities as part of a broader
effort to reduce spending and shrink the Federal Government's real
estate footprint will be met.
Answer. FEMP continues to play a central role in guiding agencies
to use funding more effectively in meeting Federal and agency-specific
energy management objectives. FEMP services are designed to help
agencies meet their energy management requirements, however, projects
with energy savings may have associated cost savings. FEMP provides the
services, tools, and expertise to Federal agencies to help them achieve
their Federal energy management goals. This is delivered through
project financing services, technical assistance, and communications
and training.
DOE Report on Reliability: On December 1, 2011, the Department of
Energy released a report entitled ``Resource Adequacy Implications of
Forthcoming EPA Air Quality Regulations.'' The report represents an
assessment by DOE of the adequacy of U.S. electric generation resources
under air pollution regulations being finalized by the U.S.
Environmental Protection Agency.
Question 20a. When did the Department begin work on this report?
When was that work completed? How long was the report under review
before it was issued? Who outside of the Department was asked or
allowed to provide input or review the final product?
Answer. As part of its core mission to understand and analyze
factors affecting the US energy system, the Department has monitored
external analysis of EPA regulations on an ongoing basis and has
consulted with EPA and other government offices on these topics when
appropriate. The Department began drafting the formal written report in
October 2011, drawing upon preliminary internal analysis that was
initiated over the summer. The report was not completed until shortly
before its release on December 1st. It did not undergo peer-review,
although DOE consulted EPA to clarify technical details about the rules
and asked a small number of experienced external energy experts to
provide comments on a draft.
Question 20b. Why did the DOE Office of Policy and International
Affairs undertake the work for this report? What role did DOE's Office
of Electricity Delivery and Energy Reliability have in preparing this
report? Did DOE consult with either the Federal Energy Regulatory
Commission or the North American Electric Reliability Corporation in
connection with preparation of the report, or before the report was
released? Please list all persons or entities that DOE vetted this
report with.
Answer. DOE's Office of Policy and International Affairs (PI) led
the effort to produce this report, with substantive input and
consultation with other DOE offices, including the Office of
Electricity Delivery and Reliability. PI led this effort because it
falls within PI's core mission to understand and analyze policies
affecting the US energy system and cuts across multiple DOE technology
areas. DOE did not consult with FERC or NERC about this report. It did
not undergo peer-review, although a small number of experienced energy
experts were asked to provide comments on a draft.
Question 20c. Why did DOE examine only two of EPA's air
regulations? Why didn't the Department provide an integrated analysis
of the multiple environmental regulations?
Answer. The report focused on the two EPA rules--CSAPR and MACT--
that are largely anticipated to have the greatest near-term impact on
the energy system. The Department did not consider two other proposed
rules--316(b) and the Coal Combustion Residuals Rule--because the
requirements of these rules are more uncertain. Since these rules could
not be modeled explicitly, the analysis instead reflected the
uncertainty itself by making conservative assumptions about payback
periods associated with pollution control technologies.
Question 20d. Do you agree that regarding reliability concerns,
local issues are of paramount concern given that many of the retiring
units provide location and site-specific services such as black start
are done at the local level? If so, why does the DOE report
specifically decline to analyze the more important local and location-
specific reliability concerns?
Answer. The report acknowledges that specific units may provide
important ancillary services and that the localized reliability
implications of retiring such units will need to be evaluated as those
units are considered for retirement or extended outages. The report did
not analyze these aspects of reliability because such an analysis would
require knowledge about specific retirement or retrofit decisions at a
unit-level that have not yet been made by the owners of those plants.
Such analyses should be conducted and reviewed at the appropriate time
by regional planning authorities, electric reliability organizations,
and additional stakeholders with the best detailed knowledge of the
relevant systems. The Department is committed to providing technical
assistance to all relevant stakeholders as the rules are implemented.
Question 21. Transmission--In the 2005 Energy Policy Act (EPAct),
Congress attempted to address the difficult issue of transmission
siting by adding Section 216 to the Federal Power Act which provided
new Federal authority in this area. Pursuant to EPAct, DOE was tasked
with conducting a study of electric transmission congestion and
constraints every three years and, based on the study, designating
National Interest Electric Transmission Corridors (NIETC or
Transmission Corridors) where existing congestion resulted in
reliability concerns or rate increases. FERC was granted limited
backstop siting/eminent domain authority for transmission lines within
those DOE-designated Transmission Corridors. DOE finalized its first
study in 2006 and in 2007 designated two Transmission Corridors--one in
the Mid-Atlantic region and the other in the Southwest. The 2009
Stimulus bill amended the 2005 EPAct language to expand the basis of
NIETC designations by including an analysis of significant potential
sources of renewable energy that are constrained by a lack of adequate
transmission capacity. With this new directive, the Energy Department
completed its second congestion study in September 2009 but basically
re-affirmed the previous two Transmission Corridor designations.
Just this past September, in light of decisions on this EPAct
provision in the Fourth and Ninth Circuits, the Department sought to
transfer its study/designation authority to FERC so that only one
federal agency would be in charge. However, rather than notify ENR, the
Committee of jurisdiction, DOE simply posted the proposal on its
website and asked for stakeholder comments. After significant backlash,
including from this Committee's Chairman who noted that any changes to
the carefully crafted 2005 compromise should be made by Congress and
not the Administration, the Department withdrew its proposal.
Question 21a. Do you believe the Department should undertake to
rework pieces of energy laws like the 2005 Energy Policy Act or the
2007 Energy Independence and Security Act without at least consulting
with the Committees of jurisdiction?
Question 21b. I understand that instead of proceeding with its
proposal to transfer its transmission authority to FERC, the Department
is now undertaking a Memorandum of Understanding with the Commission.
What is the status of that MOU and how will it differ from DOE's
initial authority transfer proposal?
Question 21c. Do you agree that the 2005 statute reflects a clear
division of authority between the two agencies and that FERC should not
have the ability to trigger its own backstop jurisdiction?
Answer(a). The Department understands that it does not have the
authority to ``rework'' statutes like the 2005 EPA or the 2007 EISA.
After receiving the delegation proposal from industry, a number of
Federal agencies involved with electric generation and transmission
projects decided to post the proposal--without endorsement--for
comment. After receiving and carefully considering comments from a wide
range of parties, the Department concluded that the proposed delegation
would not be an appropriate action.
Answer(b). After further discussion with FERC, the Department has
concluded that an MOU on this subject is not needed.
Answer(c). While members of congress have differing views on the
congressional intent underlying the 2005 statute, the Department
recognizes that the language of the Energy Policy Act of 2005 defines
certain roles for the Department and other roles for the Federal Energy
Regulatory Commission resulting in a division of authority.
Question 22. Loan Programs Office: Who is currently in charge of
the day-to-day operations of the Department's Loan Programs Office?
Answer. David Frantz, a career DOE employee and Director of
Origination, is currently serving as Acting Executive Director of DOE's
Loan Program Office, reporting to Deputy Secretary of Energy Daniel
Poneman. Mr. Frantz has more than 25 years of experience in project
finance and prior to joining DOE, worked at the Overseas Private
Investment Corporation, where he managed a team responsible for closing
financial transactions to assist U.S. businesses investing overseas and
promoting economic development in new and emerging markets.
Question 23. ATVM Loans--The Department has entered into a
conditional commitment, through the Advanced Technology Vehicles
Manufacturing (ATVM) Program, for a $730 million loan to the domestic
subsidiary of a Russian company for a project to produce advanced high-
strength steel. This loan commitment is controversial for several
reasons, and raises a number of questions about DOE's interpretation
and implementation of the ATVM statute. To the extent that you are
unable to answer the following questions on your own, please work with
other officials at the Department to do so and return complete answers.
Question 23a. When was advanced high-strength steel first produced
in the United States?
Answer. This is not within the scope of the Department's loan
program review, as it does not impact the ability of the applicant to
meet the objectives of the ATVM program or their ability to repay their
loan.
Question 23b. When was advanced high-strength steel (AHSS) first
used in a light-duty automobile in the United States?
Answer. This is not within the scope of the Department's loan
program review, as it does not impact the ability of the applicant to
meet the objectives of the ATVM program or their ability to repay their
loan.
Question 23c. Is the Department aware of any companies within the
domestic steel industry who have produced--or plan to produce--advanced
high-strength steel without receiving a loan from the ATVM program?
Please list those companies, along with the dates each began or will
begin to produce advanced high-strength steel.
Answer. Demand for uncoated AHSS capabilities in higher grades will
grow significantly over the next 10 years, due to fuel efficiency and
crash safety standards. At this time, ArcelorMittal has the only
dedicated continuous annealing line (CAL) to produce uncoated and
martenistic steels in the US. Severstal's expansion at its Dearborn, MI
facility will represent the second CAL production projected to come on
line in the US, in 2012. Based on market analysis, US demand from AHSS
will continue to grow and there is currently insufficient US
manufacturing capacity to meet this demand. While other lines have been
announced, it is unclear as to their timing and production status. The
Department's loan program welcomes applications from any of these
companies.
Question 23d. In determining eligibility for loans under the ATVM
program, does the Department make any distinction between a vehicle
``material'' and a vehicle ``component''? Why or why not?
Answer. Each ATVMIP application undergoes a thorough review of its
statutory eligibility. As a part of this process, DOE has determined
that AHSS is reasonably understood to meet the statutory definition of
``qualified component'' as set forth in Section 136(a)(4) of the Energy
Independence and Security Act of 2007 (EISA). ``Qualifying components''
are ``components that the Secretary determines to be (A) designed for
advanced technology vehicles (ATVs) and (B) installed for the purpose
of meeting the performance requirements of ATVs.'' AHSS meets the
requirements of a component for which the Secretary has the statutory
discretion to determine qualification. In this regard, AHSS is designed
for automotive applications, currently the only major use for these
high grades of steel. AHSS is also installed for the purpose of
improving fuel economy in ATVs. Prior to reaching a determination on
eligibility, DOE confirmed that automotive original equipment
manufacturers (OEMs) would use AHSS in qualified ATVs.
Question 23e. Did the Department issue any rulemaking--and seek
public comment on that rulemaking--before determining that advanced
high-strength steel is a ``component''? Upon determination that
advanced high-strength steel (or any other material or component)
qualifies for ATVM awards, does DOE have any responsibility to
advertise that expanded eligibility to the general public, including
other companies in the industry and other materials suppliers?
Answer. DOE did not issue a rulemaking prior to determining that
AHSS is a component. DOE's determination was made as a matter of
statutory interpretation after all due consideration.
Question 23f. Please explain if there are any limits to the
material/component projects that the Department believes are eligible
for ATVM loans. Given that rare earth elements are used in many
advanced vehicles, would a project to modify or establish a rare earths
processing or beneficiation facility be eligible to receive an ATVM
loan based on the Department's current statutory interpretation?
Answer. As highlighted above, the Department's Loan office places
great importance on the statutory eligibility of each applicant and
carries out a thorough review to determine its eligibility. This review
takes place on a case-by-case basis. At this time, ATVM has not carried
out a thorough review to determine the eligibility of rare earth
elements under the ATVM program.
Question 23g. Please explain how low-cost federal financing for one
company within the domestic steel industry will not afford it an unfair
advantage compared to competitors that do not receive the same low-cost
federal financing.
Answer. As set forth in Section 136(a)(4) of the Energy
Independence and Security Act of 2007 (EISA), ATVMIP authorizes funding
awards and a direct loan program for OEMs and component suppliers that
re-equip, expand, or establish manufacturing facilities in the U.S. to
produce qualifying vehicles and components. The loan program welcomes
applications from any companies that meet the objectives of the
statute.
Question 23h. Please provide all market analysis for advanced high-
strength steel that the Department completed prior to its recent
conditional commitment.
Answer. Market analysis is a critical part of evaluating a
company's prospect of loan repayment. Before issuing loans, DOE closely
analyzes and considers the competitive landscape and the impact of new,
potential competitors on the existing market.
DOE's market research is extensive and performed by highly
regarded, independent engineering and consulting firms in the
automotive and industrial manufacturing sectors. The due diligence
performed on Severstal Dearborn, as with all other ATVMIP evaluations,
included both a top-down and bottom-up market analysis of historical,
current and anticipated future market conditions for both commodity and
advanced high strength steels (with special focus on martensitic ultra
high strength and uncoated steels). Moreover, the project's
construction, production and operations costs were carefully reviewed.
The analysis considered the rate of AHSS use abroad, specifically by
foreign vehicle manufacturers selling imported vehicles in the U.S., as
well as the importation of high tensile strength steels and the costs
to OEMs and vehicle consumers. These considerations were determined to
be critical inputs in evaluating Severstal Dearborn's suitability for
the program and its ability to repay a loan.
Question 23i. Please provide all analysis that the Department
completed with regard to potential impacts this loan could have on
other firms in the steel industry, before it concluded that the recent
$730 million conditional loan commitment was warranted.
Answer. As highlighted above, DOE carried out extensive top-down
and bottom-up market analysis of historical, current and anticipated
future market conditions for both commodity and advanced high strength
steels. It was determined from this market analysis that US demand from
AHSS will continue to grow and that there is currently insufficient US
manufacturing capacity to meet this demand. To date, there is only one
other domestic supplier of martensitic uncoated steels capable of
providing high product volumes in the near term, but it is expected
that the supplier will be unable to meet full market demand. In order
to meet domestic demand and ensure dollars and jobs remain within the
US, there is a need for additional US manufacturing of AHSS.
Question 23j. Please provide the current construction status of all
facilities that were to be reequipped, expanded, or established under
the project that was awarded a $730 million conditional loan
commitment. To the extent that facilities in the project have already
started construction or been completed, please explain why the
Department determined that the loan was still necessary and
appropriate.
Answer. Severstal decided to modernize and expand its manufacturing
facilities for the production of AHSS shortly before a major
contraction within the steel industry and the broader financial market.
Beginning in late 2007, Severstal Dearborn embarked on a capital
improvement program, substantially similar in planning to the first
phase of the project considered by the ATVMIP for the production of
coated steels using a hot dip coating process. Due to the recession and
the contracting credit market, Severstal was forced to stop work in
early 2008 and the project was placed on indefinite hold. The extent of
the work completed at that time was minimal, consisting of the
incomplete framing of a building intended to serve as the improved
facility. Due to financial constraints, no additional progress was made
on the project until the company submitted its ATVMIP application. The
expenses associated with this part of the project were incurred prior
to the company's submission of its ATVMIP application and therefore
cannot be reimbursed under the ATVM rulemaking.
In September 2009, Severstal's application to the ATVMIP was
determined by program staff to be substantially complete. Under the
ATVM regulation, eligible project costs incurred and paid between the
date of an application's substantial completeness and loan close
qualify for reimbursement should the loan be made. Since the project
has not yet closed, Severstal has incurred any expenditures to-date at
its own risk. For ten months (September 2009-June 2010), the Applicant
conducted no project work. In June 2010, Severstal requested permission
from the Loan Programs Office NEPA group to begin working on ``interim
actions'' related to facility construction under Phase I of the
project. Permission being granted, Severstal embarked on the
development of its pickling line and hot dip coating facility, funding
at its own risk in hopes of securing a DOE loan, through a combination
of equity contributions from Severstal's parent, subordinated debt, and
two existing, limited scope, credit facilities from major banks. At no
time was Severstal assured of success in its pursuit of a loan. During
this phase of the ATVMIP process, DOE conducted financial, market,
legal and credit due diligence, and the Office of Management and Budget
approved the credit subsidy rate. On July 8, 2011, the DOE approved
moving forward with a conditional commitment to Severstal. As noted
above, finalization of the loan is still pending.
At the time of the conditional commitment, approximately one year
after commencement of interim actions, the Phase I facility was
approximately 80% complete, which greatly reduced the credit and
execution risk associated with the project, helping protect taxpayer
interests by improving the DOE's collateral position and supporting the
borrower's prospects for loan repayment. The Phase I facility is still
in testing and qualification and has not yet begun volume production.
Phase II, the construction of a continuous annealing line facility for
uncoated AHSS, has not yet broken ground. The company has represented
to the ATVMIP that this phase is dependent on both the completion of
Phase I and securing a DOE loan, as the company itself does not
currently have the resources to complete the project without government
assistance. Assuming a loan is approved, Phase II construction would
begin in the late first quarter of calendar year 2012.
Responses of Arunava Majumdar to Questions From Senator Barrasso
Question 1. Do you believe the United States should have a robust
uranium mining industry? If so, why?
Answer. Yes, I believe that U.S. power reactors must have access to
an adequate supply of uranium to enhance our national security and
support the Administration's view that nuclear energy should continue
to make a major contribution toward meeting our energy requirements and
addressing the challenge of global warming.
Question 2. If confirmed, will you communicate the importance of
the domestic uranium mining industry to other agencies within the
Federal government, including the Department of the Interior and the
Environmental Protection Agency? If so, how?
Answer. The Department is supportive of the advancement of nuclear
energy, including support for domestic uranium mining, and will
communicate that position within the Federal government. On an equal
footing, I support the efforts of the Department of Interior and the
Environmental Protection Agency to support their missions and protect
the public interest.
Question 3. If confirmed, you will oversee the Office of Nuclear
Energy. The Office of Nuclear Energy has responsibilities, together
with the Office of Environmental Management and the National Nuclear
Security Administration, for managing and disposing of the Department's
excess uranium inventory. If confirmed, what steps will you take to
ensure that the Department adheres to its 2008 Excess Uranium Inventory
Management Plan?
Answer. If confirmed, I will ensure the Department remains
committed to following the principles and policies contained in the
2008 Excess Uranium Inventory Management Plan, whereby the Department
will manage its excess uranium inventories in a manner that: (1)
complies with all applicable legal requirements; (2) maintains
sufficient uranium inventories at all times to meet the current and
reasonably foreseeable needs of DOE missions; and (3) supports the
maintenance of a strong domestic nuclear industry.
Question 4. If confirmed, what steps will you take to ensure that
the Department does not dispose of more uranium into the market than
that identified in its 2008 Excess Uranium Inventory Management Plan-
specifically, 3.8 million pounds in calendar year 2012 and 5 million
pounds annually in calendar years 2013 through 2017?
Answer. DOE has established priorities for the transfer of uranium
through 2013 consistent with the principles and policies set forth in
the 2008 Excess Uranium Inventory Management Plan. On March 2, 2011,
Secretary Chu announced that he had determined, based on a market
impact analysis, that the planned transfers to fund accelerated cleanup
activities at the Portsmouth Site in Piketon, Ohio, will not have an
adverse material impact on the domestic uranium mining, conversion, or
enrichment industries. The total proposed Departmental transfers
through calendar 2013, including previously planned transfers by
National Nuclear Security Administration, total approximately 2,000
metric tons of uranium per year, or about 10 percent of U.S. reactor
demand, consistent with the guideline or objective the Department set
out in the 2008 Plan. I do not anticipate any changes going forward
with respect to the principles and policies contained in the
Department's 2008 Plan.
Question 5. In September of 2011, the Government Accountability
Office found that the Department violated Federal law (31 U.S.C.
3302(b)) in a series of transactions with USEC between December 2009
through June 2011. Do you believe the Department violated Federal law
with respect to these transactions? If not, why not?
Answer. I am not an attorney, but the Department's response to the
GAO report, including its legal analysis, is contained in Appendix IV
to the report. I refer you to that response, available at http://
www.gao.gov/new.items/d11846.pdf , for the Department's position on
this matter.
Question 6. If confirmed, what steps will you take to ensure that
the Department adheres to the miscellaneous receipts statute (31 U.S.C.
3302(b))?
Answer. As stated in its response to the GAO Report, the Department
does not believe it violated the miscellaneous receipts statute in the
transactions analyzed by GAO. Nevertheless, the Department will take
GAO's concerns into account in future transactions.
Question 7. The Department has indicated that it is revising its
2008 Excess Uranium Inventory Management Plan. If confirmed, what steps
will you take to ensure that the revised plan will promote a strong and
stable domestic uranium mining industry?
Answer. As I have indicated in response to a previous question, if
confirmed, I will fully support the Department's principles and
policies contained 2008 Excess Uranium Inventory Management Plan are
reflected in the revision to the Plan. The Plan will incorporate these
principles and policies and set forth the Department's intended
transfers, which will be conducted in a manner that: (1) complies with
all applicable legal requirements; (2) maintains sufficient uranium
inventories at all times to meet the current and reasonably foreseeable
needs of DOE missions; and (3) supports the maintenance of a strong
domestic nuclear industry. It is especially important to note that for
certain kinds of transfers or sales of uranium, the Department is
subject to requirements under 3112(d) of the USEC Privatization Act,
including a determination by the Secretary that the proposed
transaction will not have an adverse material impact on the domestic
uranium mining, conversion, or enrichment industries.
Question 8. If confirmed, what steps will you take to ensure that
the revised plan's annual limits on the Department's excess uranium
inventory dispositions will be no more than 5 million pounds or 10
percent of annual domestic fuel requirements?
Answer. If confirmed, I will support the Department's general
guideline, set forth in both the 2008 Plan and the 2008 Secretary of
Energy's Policy Statement on Management of the Department of Energy's
Excess Uranium Inventory, to keep the quantity of uranium introduced
into the domestic market within 10 percent of average annual domestic
demand. The Department believes, as do I, that the introduction into
the domestic market of DOE inventories in amounts that do not exceed 10
percent of the annual U.S. fuel requirements should not have any
adverse material impact on the domestic industry. The 10 percent
guideline was in fact one of industry's recommendations regarding the
Department's management of its uranium. As acknowledged in the Plan,
however, the Department anticipates that in any given year it may
introduce less than that amount into the domestic market and that in
some years it may introduce more for certain special purposes.
Regardless of whether a particular transfer or sale is above or below
the 10 percent guideline, if it is a transaction that is covered by
section 3112(d) of the USEC Privatization Act, the Secretary must
determine that that a proposed transfer or sale will not have an
adverse material impact on the domestic uranium mining, conversion, or
enrichment industries in order for that transaction to occur.
Responses of Arunava Majumdar to Questions From Senator Portman
Dr. Majumdar, as you know, one of the administration's priorities
in the energy research portfolio has been the hubs of innovation.
Secretary Chu originally sought funding for eight hubs; to date
Congress has funded three to examine Fuels from Sunlight, Modeling and
Simulation, and Energy Efficient Building. Further funding has been
proposed for creation of the Battery and Energy Storage and Critical
Materials Hubs.
Question 1. How would you assess the progress of these Hubs?
Looking forward, I would like to ask for your further thoughts on the
proposed Hub for Smart Grid research.
Answer. The Hubs continue to make strong progress in their
respective technical areas. By bringing together researchers from a
diverse, complementary set of fields under the leadership of strong
scientist-managers, the Hubs have succeeded in creating a ``critical
mass'' of research attention on these high-value problems. The Smart
Grid Hub will replicate key features of this successful model in the
area of grid technologies. However, recognizing the significant
regional diversity of the electricity system, DOE is considering the
concept of supporting multiple Smart Grid ``Hublets'', rather than
using a ``single roof'' approach. Under this model, these several
``Hublets'' would secure partnership and cost-sharing with industry,
local governments and other stakeholders in their region, in order to
explore regional-level technology and institutional solutions while
maintaining coordination for the national interest.
Question 2. How do you see the proposed Hub for Smart Grid research
interfacing with existing federal funding supporting Smart Grid
technologies?
Answer. While the Smart Grid Hub will leverage the activities of
existing programs, its general focus would likely be on the unique
technology, market, and policy issues at the interface between
electricity transmission and distribution. The trend toward increased
deployment of distributed generation, electric vehicles, and customer
participation in wholesale electricity markets has blurred the
traditional boundary between transmission and distribution, introducing
new complexity to the grid system. A systems-level, grid-centric
approach pursued by the Hub would help realize the full potential of
these clean technologies as well as emerging grid technologies.
Question 3. Do you see a Smart Grid Hub geared more toward
fundamental research or applied research and commercialization?
Answer. The Smart Grid Hub will likely focus on applied research
and commercialization, while also exploring the market and
institutional issues that are critical for successful deployment of
innovative grid technologies and solutions. Education and training for
the next generation of grid designers, engineers, and operators is also
likely to be a cornerstone of the Hub's efforts.