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Hearing of the Senate Budget Committee - The President's Fiscal Year 2010 Budget Proposal for the Department of Energy

CHAIRED BY: SENATOR KENT CONRAD (D-ND)

WITNESS: STEVEN CHU, SECRETARY, DEPARTMENT OF ENERGY

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SEN. CONRAD: The hearing will come to order. I want to welcome Secretary Chu here to the Senate Budget Committee. Welcome. Good to have you here. Secretary Chu is one of the nation's leading scientists. In 1997, he was a co-winner of the Nobel Prize for physics.

Prior to his nomination by President Obama, he was director of the Department of Energy's Lawrence Berkeley National Lab. He was director of the Department of Energy's Lawrence Berkeley National Lab and a professor of physics and molecular and cell biology at the University of California. As a proud graduate of Stanford, we still respect the University of California. (Laughter.) I want to assure you of that. At Lawrence Berkeley he steered the lab's effort in pursuit of new alternative and renewable energies as he -- and so he is ideally suited to lead the Department of Energy at this time. We are pleased that Secretary Chu could join us, and we look forward to his testimony.

I don't believe it's ever been more clear that our nation's economic and national security are directly linked to our energy policy. We simply must address our nation's addiction to foreign oil and confront the challenge of global climate change. And in the process we can create new green jobs and an alternative energy and energy efficiency that will help our nation's economy recover.

The fact is we are still dangerously dependent on foreign oil. In 1985, we imported only 27 percent of our petroleum. We now import almost 60 percent of the petroleum that we use. As a result, we are becoming increasingly vulnerable to oil supply disruptions and instability in other parts of the world. This addiction to foreign oil is a direct threat to our national security. Many of the countries from which we import petroleum are in unstable or unfriendly regions.

Here is a list of the top 15 countries exporting petroleum to the United States in 2008 and the number of barrels of oil we import in a single day. You can see that we import large quantities of oil from countries like Saudi Arabia, Venezuela, Nigeria, Angola, Iraq, Algeria and Colombia. We must also address climate change. The scientific consensus is clear.

Here are the conclusions of the Inter-governmental Panel on Climate change, and I quote: "Warning of the climate system is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice and rising global average sea level. Continued greenhouse gas emissions at or above current rates would cause further warming and induce many changes in the global climate system during the 21st century. We have an obligation to current and future generations to take meaningful action to reduce greenhouse gas emissions."

The economic recovery package included some key energy investments to begin to address these issues and included $11 billion for a down payment on modernizing the electrical grid, $6.3 billion for local government, energy efficiency, and conservation grants, $6 billion for renewable energy and transmission loan guarantees, $5 billion for weatherization assistance, $3.4 billion for carbon capture and sequestration technology, $2.5 billion for energy efficiency and renewable energy research and development, and $2 billion for advanced battery development.

President Obama's budget takes further steps. The budget includes $26.3 billion in discretionary funding for the Department of Energy for 2010. The President's cap and trade proposal would reserve $15 billion of revenue beginning in 2012 for clean energy technology. And the budget builds on investments in the economic recovery package by increasing support for solar, biomass, wind and geothermal energy, advancing development of low carbon coal sequestration, investing in transmission infrastructure to improve energy efficiency and reliability, and providing significant increases for basic research and science. We look forward to hearing more details from Secretary Chu.

Despite these advances in energy policy and new commitments of funding to energy, it is clear that this is going to require a sustained effort for years to come. Here was a headline in the Washington Post just last month: "Alternative energy still facing headwinds despite Obama's support. Projects tripped up by financing and logistics. So we know addressing our addiction to foreign oil and global climate change will not come easily, but it must be done.

With that, I want to turn to my colleague, Senator Gregg, for his opening remarks, and then we'll go to Secretary Chu for his opening statement, and then we'll go to seven-minute questioning rounds.

Senator Gregg.

SEN. GREGG: Thank you, Mr. Chairman, and a great honor to have Secretary Chu here, and to have him serving in the government. We really appreciate that someone of your stature and ability has chosen to come into the government.

I am concerned, as the chairman is, about our reliance on foreign oil. I think we as a nation, if we are to address not only our national security needs, but our economic concerns, have to do something about this. That's why I was a strong supporter of the initiatives which we -- had some traction last year, but unfortunately have been recently sidetracked by this Administration, which is, to summarize -- drill more for domestic product and conserve more.

I'm also concerned about climate change, and I think we should try to move away from carbon-based production of energy. And that's why I've been a strong supporter of nuclear power. And I'm genuinely concerned about this Administration's approach to nuclear power. If you look at the recent stimulus bill that was passed, tripped from that bill was approximately $50 billion -- I think it was $50 billion of potential loan guarantees, which were -- would have helped us fund an expansion of nuclear power.

If you look at the proposals of this Administration relative to Yucca Mountain and the disposal of waste, it's basically a proposal which, as I understand it, says we have no options for disposing of waste. And we know that under the licensing procedure you can't really license unless you can adequately address the waste issue. So this is a backdoor way of basically limiting licenses of new plants, in my opinion, rather than formally saying you're not going to license new plants, you're -- it's being done in a indirect way of saying, well, we're not going to make available adequate waste disposal initiatives, therefore we won't be able to license new plants.

It seems to me we're cutting off our nose to spite our face when we abandon nuclear, or limit what is a genuine renewed interest in the use of nuclear. Because nuclear is emission-free and it is a hugely productive source of energy, already producing 20 percent of our energy in this country through nuclear, and compared to renewable sources, it has even -- it dwarfs their capability or potential.

If you double the amount of energy that we've produced in this country from wind and solar, which I'd love to see us do, you're still only going to use -- you're still only going to supply four percent of the nation's energy. If you double the amount of energy we produce from nuclear, you get 40 percent of the nation's energy. And it's very doable. I mean, it's not like it's not there. Very, very doable. All we have to do is give -- support it with the resources on the loan side and have a licensing process which is reasonable.

So I want to hear specifically from the secretary on the Administration's position on nuclear. Are you for it, or are you against it? If you are for it, how many plants do you plan to license in the next four years? And what is the timeframe for licensing, and what is the timeframe on waste, on coming up with a proposal on waste disposal? I think this is critical to our ability to get off of oil and to address the climate change issues which are so essential.

So I look forward to the secretary's testimony, and thank you for being here.

SEN. CONRAD: Thank you, Senator Gregg, and again, Secretary Chu, welcome to the Senate Budget Committee, and we hope we have many more appearances by you during your tenure. And we are delighted that you have accepted this position of responsibility. Please proceed.

MR. CHU: Okay, thank you, Chairman Conrad, Ranking Member Gregg, and members of the committee. Thank you for giving me the opportunity to appear before you to discuss the President's fiscal 2010 budget.

Before I begin, I have to also note that I spent 17 years at Stanford, and --

SEN. CONRAD: You know, I thought you looked especially bright. (Laughter.)

MR. CHU: And my wife spent 30 years at Stanford. She was the chief of staff for the two presidents at Stanford, Dean of Admissions, although trained with a PHD in physics. But anyway -- so I have divided loyalties. I'm also very loyal to the University of California Berkeley.

The President's budget recognizes the enormous challenges and threats we face because of the way we use energy. Today, as you indicated, we use -- import roughly 60 percent of our oil, draining our resources from our economy, and leaving it vulnerably to supply disruptions. Much of that oil is controlled by regimes that don't share our values, further weakening our security.

Additionally, if we continue to use -- continue our current rates of greenhouse gas emissions, the consequences of our climate could be disastrous. If we, our children, our grandchildren, are to prosper in the 21st century, we must decrease our dependence on oil, use energy in more efficient ways possible, and lower our carbon emissions. Meeting these challenges will require both swift action in the near- term and sustained commitment for the long-term to build a new economy powered by clean, reliable, affordable, and secure energy.

The President took several strong steps towards that goal with the America Recovery and Reinvestment Act. As President Obama says, this act is putting Americans back to work doing the work America needs done. Let me highlight a few of its provisions on energy.

First, the Recovery Act will create new jobs, making our homes and offices more energy efficient. It will include $5 billion to weatherize homes of low-income families, a $1,500 tax credit to help homeowners invest in efficiency upgrades, $4.5 billion to green federal buildings, including reducing their energy consumption, and $6.3 billion for states and local efficiency and renewable efforts.

The Recovery Act also includes $6 billion for loan guarantees and more than $13 billion in estimated tax credits and financial assistance instruments. That may leverage tens of billions in the private sector, investment in clean energy and job creation. This will help clean energy businesses and projects get off the ground, even in those difficult economic times.

The bill also makes investments in (key ?) technologies, such as $2 billion in advanced battery manufacturing, $3.4 billion for fossil fuel energy research and development in support of clean coal efforts, and $4.5 billion for our efforts to modernize the electric grid.

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

The President's fiscal year 2010 budget will continue in its -- this transformation to a clean energy economy while returning to fiscal responsibility. The President has pledged to cut the deficit he inherited by at least half by the end of his first term. But even as we make hard choices to begin to bring down the deficit, the President's budget will make strategic investments in America's economic future, investments that have been delayed for far too long. It lays the groundwork for our future prosperity by bringing down the high cost of healthcare, by giving all our children a world class education, and by reducing our dependence on foreign oil and creating millions of clean energy jobs.

The President's fiscal year 2010 budget provides $2.6 billion -- $26.3 billion for the Department of Energy with investments in basic science and in clean energy technologies while securing and properly managing our nation's nuclear materials. The development of this budget carefully considered the funding in the Recovery Act for the Department of Energy and compliments those investments. The line-by- line details of the FY 2010 budget are not yet final, but I'd like to share with you a few of our priorities.

Investing in science -- the President has set a goal of doubling federal investment in the basic sciences. As part of that plan -- 2010 budget provide substantially increased support for the Office of Science, increases funding for climate science, a critical area of concern, and continues America's role in international science and energy experiments.

The budget also invests in the next generation of America's scientists by expanding graduate fellowships, programs in critical energy-related fields. The funding builds upon the $1.6 billion provided in the Recovery Act for basic science programs at the Department of Energy.

To encourage early commercial use of innovative clean energy technologies, the budget supports loan guarantees to help these projects get off the ground. These include renewable energy projects, transmission projects, carbon sequestration projects that avoid, reduce, requester air pollution and greenhouse gases. It also provides support for research development and deployment and commercialization of biofuels, renewable energy, energy efficiency projects.

It also allows us to exploit our huge -- (inaudible) -- coal reserves, resources, with reduces harmful greenhouse gas emissions. The budget supports carbon capture and storage technology. This is in addition to the $3.4 billion provided in the Recovery Act for low- carbon emission coal power and industrial projects. Together, these investments will reduce our dependence on oil and create sustainable green industries that will power our economy long into the future.

As part of the President's plan to modernize the nation's electric grid, the budget provides support for the Office of Electricity delivery and energy reliability. Goals of this program include improved energy storage, security, Smart Grid technology and reliability. A new Smart Grid will be more reliable, more secure, and quicker to recover from disruptions.

To enhance our security, the budget increases our efforts to secure and dispose of nuclear material, investing in innovative technology to detect and deter nuclear smuggling and weapons of mass destruction. Under this budget, development work on the Reliable Replacement Warhead will cease while we continue to make investments to ensure the nuclear stockpile safety, security and reliability. We will also improve performance and accountability for the environmental legacy of our nation's nuclear weapons program.

Meanwhile, the budget begins to eliminate funding for Yucca Mountain as a repository for our nation's nuclear waste. Both the President and I have made it clear that Yucca Mountain is not a workable option, and that we'll begin a thoughtful dialogue on a better solution for our nuclear storage waste needs.

For the longer term, the President has pledged to work with Congress to design a cap and trade system to reduce greenhouse gas emissions. Such legislation will place a market base cap on carbon emissions and drive the production of more renewable energy in America. It will provide the framework for transforming our energy system to make our economy less carbon intensive and less dependent on oil.

Our energy agenda is an ambitious one, but it's the right one. We simply cannot afford to put off these investments any longer. With the leadership of the President, the actions of this Congress, and the support and participation of the American people, I'm confident we will succeed.

Thank you, and I'll be glad to answer your questions -- (inaudible).

SEN. CONRAD: Thank you very much for that opening statement, Mr. Secretary. Let me begin talking about your basic philosophical construct as you approach the question of how we'd reduce our dependence on foreign energy. I've been part of a group that was dubbed by the media The Gang of Ten, later became a group of 20 evenly divided between Democrats and Republicans that advocated a comprehensive approach to reducing our dependence on foreign energy, including increasing domestic production, dramatically ramping up conservation, a very strong investment in renewables -- wind, solar, plug-in, hybrid -- an overarching goal of getting our transportation sector moved off of carbon-based fuels over the next 20 years. Nuclear power -- support for nuclear power was part of this.

So the basic vision guiding this group was doing some of a lot of different things in order to dramatically reduce our dependence on foreign energy. Could you give us how you see it, how you approach this problem? What is it that informs your decisions that you will be making?

MR. CHU: Well, I have to say I agree with just about everything you said. Many approaches have to be used simultaneously. In terms of conservation of energy, that is -- in terms of decreasing our dependence on foreign oil, that's the quickest thing we can do; improve (CAFE ?) standards, things of that nature. The Department of Energy will be investing a great deal in battery technology to make plug-in hybrids a reality. Roughly 60, maybe 65 percent of the transportation energy we use is in personal transportation. Most of that personal transportation is 40, 50 miles or less per day. So if you can offload that demand and have access to other forms of generating energy via electricity, that would decrease our dependence.

I think biofuels has great potential. That is to say biofuels -- what I would call fourth generation biofuels -- where we can take biowaste, (wheat straw, half the corn ?) -- (inaudible) -- lumber waste, as well as very rapidly growing grasses that don't require that much energy input -- there are estimates -- for example, an Oakridge study that says we can -- there can be a billion tons of this material with -- and converting a billions tons to 100 gallons of ethanol per ton will actually add a tremendous amount of roughly -- more than half of our current transportation needs.

So I think there is a real possibility for all those things. So you just go down the route. I think nuclear has to play a very important role in this century for our energy needs. It's nuclear energy that can be generated. At night you can recharge your plug-in hybrid cars.

SEN. CONRAD: Let me ask you this, if I could. Another part of the effort was to support carefully thought through offshore drilling. Our group concluded while that's no silver bullet -- it's not going to solve the problem -- nonetheless, it's an important part of the mix. Have you views on offshore drilling?

MR. CHU: Well, yes, I think if it's part of the mix, and realizing that it can play a role, but it really has to be part of a much more comprehensive plan, as you stated, and as I said. We have to break our dependence on foreign oil, but many of the things will be fighting oil substitutes and decreasing our use, unnecessary use of oil. But there's part of the transportation sector -- in airplanes, in long distance trains, long distance trucks -- that for the foreseeable -- the near-term future we're not going to be using. We need liquid transportation fuels for that.

SEN. CONRAD: I have less than three minutes left. Let me just say we're asking everybody to have seven minute rounds on the first round here today, a little more time than we had yesterday because we're not backed up against a billet, but -- so I want to get as quickly as I can to the questions that I have.

Coal -- I come from the state of North Dakota. Most people think of that an agricultural state, and indeed, we are proud of it. But we are also a major energy state. Very few people think of us that way, but we're one of the major oil and gas producers, have major coal deposits. And I see this battle every night on television about coal, and some advocating clean coal technology, carbon sequestration, recognizing that 50 percent of our electricity currently comes from coal. I see these other ads running that say there's no such thing as clean coal, and it's all a ruse and a farce.

What would you say to the American people? What would you say to this committee and to the Senate of the United States with respect to coal?

MR. CHU: Well, I think that coal, again, in this century, will have to play a part of our energy mix. It is abundant. There are four countries that hold two thirds of the known coal reserves. The U.S. is number one. It has the largest reserves of coal. China, India, Russia. To my associates and friends who say that the -- America should stop using coal, I would say we have to -- I would say -- I would counter that by saying we have to develop clean coal technologies because India and China will not turn their back on coal. And I don't think the United States will. I think it is very possible that we can begin to develop these technologies aggressively so that we can trap a large fraction of the carbon emitted from these coal plants. It's a necessity given the fact that the world has incredible coal reserves.

SEN. CONRAD: I have just 30 seconds left. If I could just pursue that issue. What are the realistic prospects for carbon sequestration? Could you give us your insight there?

MR. CHU: We need to pilot existing technologies simultaneously, existing technologies that can capture some reasonably large fraction (that leads again in parity of natural gas ?) as a minimum.

SEN. CONRAD: And what would that be as a percentage realistically?

MR. CHU: A percentage of how much carbon?

SEN. CONRAD: (Could be -- ?)

MR. CHU: I would hope that we could capture 60, 70 percent at the start and then do the research that brings into economic viability -- to go to 80, 90, and plus percent. But I don't want to start by saying we have to begin with 90, 95 percent. So we want to get it going. We have to test technologies. In the meantime, I plan to put in a lot of money into research to test new ideas that could revolutionize -- but the existing technologies we need to start piloting today.

SEN. CONRAD: Thank you.

Senator Gregg.

SEN. GREGG: Thank you, Mr. Chairman.

Mr. Secretary, first off, I appreciate your allusions alluding to the fact that you do support nuclear as an option here, but I look at the constituencies who've been active in the Democratic party, and many of them actively oppose nuclear power. My own experience in New Hampshire as governor was that we were trying to bring online the last nuclear power plant licensed in this country, which was called Seabrook, and it took us an extra 15 years, cost the rate payers in New Hampshire an extra billion dollars because of the extremely aggressive opposition to the use of nuclear power, which was mostly affiliated with members of the Democratic party in our state.

And so I think there is at the core of your -- the party that you represent -- and a real resistance to using nuclear power, and I think we ought to be honest about that. And so my question to you -- is this Administration going to support the licensing of new nuclear power plants? There are 31 pending, and -- or are you going to be using -- or will any of those plants be limited in their ability to be licensed by the representation that you're no longer going to pursue Yucca, which I can accept if you had another option, and therefore, there is no way to dispose of the waste that's effective, or that would be the representation, and therefore, the plants can't be licensed. Of the 31 plants that are pending, how many will be licensed in the next four years?

MR. CHU: Okay, so I think I've been very clear (since joining ?) the Administration and actually previous to that that I believe that nuclear power is an essential part of our energy mix. It provides clean base flow generation of electricity. In terms of the Yucca Mountain issues and nuclear waste, I think looking back at how that started --

SEN. GREGG: I don't want to debate Yucca --

MR. CHU: Okay.

SEN. GREGG: -- because I accept the fact that Yucca --

MR. CHU: Okay, fine.

SEN. GREGG: -- may not be viable.

MR. CHU: So what I intend going forward to do is -- beginning to discuss with various people -- a Blue Room panel to say, okay, let's develop a long-term strategy that must include the waste disposal plan in order to go forward --

SEN. GREGG: But are you going to limit the licensing of these 31 pending plants until you complete this, as you called it, thoughtful dialogue?

MR. CHU: No, I don't -- first, the NRC does the licensing, and --

SEN. GREGG: (I know ?), but will it be the policy of the Administration?

MR. CHU: Well, I don't think the NRC should be limiting that or putting the licensing on hold, quite frankly, because the NRC has also said that we can put in the waste currently we now have in distributed (sites ?) into dry (casks ?) and that dry cask storage could be saved for decades. While we develop this -- and it's -- within this year we hope to develop a plan to move forward. So I don't see that as preventing going forward with aggressive licensing, quite frankly, but again, that's the NRC domain.

SEN. GREGG: Will you be promoting additional lending authority? For example, $50 billion was taken out of the stimulus package to assist in the construction of nuclear power plants.

MR. CHU: I would actually be in favor of increasing -- but we have $18.5 billion where we're moving very aggressively towards getting that money out the door.

SEN. GREGG: But that only will do three to five plants, so there was $50 billion --

MR. CHU: (Inaudible.)

SEN. GREGG: -- in the pipeline that was taken out. Would you support putting that back in, that guarantee?

MR. CHU: Well, let's just say I would support encouraging the nuclear industry to grow at least -- even -- we're right now focused on starting the next generation of power plants, getting a generic licensing of the Westinghouse and GE designs. And so you can accelerate that. You get -- the AP -- for example, the AP 1,000 license, and then a much shorter licensing period for a particular site. So we are working hard and helping get those initial generic licensing through the door with the NRC.

So I know you're a little bit suspicious, but believe me, we -- I want to encourage this thing to go forward.

SEN. GREGG: I appreciate that, and I think your voice would be extraordinarily helpful because you're so highly regarded for your expertise.

Another question. You outlined a series of different sources where you could produce ethanol at a reasonable -- without having to put more in than you get out, to put it simply --

MR. CHU: Right.

SEN. GREGG: -- you know, switchgrass and other available -- other types of biomass. Doesn't the present subsidy structure of ethanol, which perversely promotes corn, undermine the ability to use those other forms of -- to aggressively pursue those other forms of biomass?

MR. CHU: No, I don't really think so, but let me also say that currently with the present technology we don't have a cost competitive technology of getting cellulose waste and grasses, but I actually have great hope that that will come about. I've personally invested a lot of my time over the last four and a half years at Lawrence Berkeley Lab. As you may know, the Lawrence Berkeley Lab with U.C. Berkeley and Illinois have gotten a BB contract for converting cellulosic sources into not only ethanol, but more advanced fuels, and the Department of Energy has invested in three research laboratories, one centered in Wisconsin, one centered in Lawrence Berkeley Lab, and one centered at Oakridge, to create advanced biofuels.

The progress in those labs has been remarkable, even though they've been in operation about one year. Berkeley Lab has already generated yeast and bacteria that can create either simple sugars -- and not ethanol, but gasoline and diesel like fuel. And so they are now concentrating on getting that productivity up so it becomes commercially viable.

The reason BP has invested a half a billion dollars in the University of California Berkeley Lab in Illinois is because they think it is actually a real possibility of a new business. So I'm pretty optimistic.

SEN. GREGG: That's good to hear. Natural gas -- shouldn't we be drilling for a lot more natural gas in the United -- I mean, we've got huge potential fields, especially the new ones that have been discovered all over the country it seems. We're always hearing about new ones, but the ones in the southern part of the country and Louisiana areas. Shouldn't we be more aggressively using natural gas and drilling for it, and drilling for it in the outer continental shelf?

MR. CHU: Well, I think natural gas is a very clean source of energy. Of all the fossil fuel energies, natural gas is the cleanest. It does have carbon emissions, but it -- I think the -- I mean, one of the concerns about natural gas is the -- partially like oils -- is extreme volatility. Yes, drilling -- developing more natural gas in the United States is -- should be part of a comprehensive energy plan.

SEN. CONRAD: Thank you, Senator Gregg.

Senator Murray, let me just say the order on our side is Murray, Cardin, Warner and Merkley. On the other side -- Crapo, Alexander, Graham, Bunning and Sessions.

Senator Murray.

SEN. PATTY MURRAY (D-WA): Thank you very much, Mr. Chairman, for holding this hearing.

Secretary Chu, good to see you again.

Thank you for being here to testify, and thank you for your willingness to take on this incredibly important agency. With everything you've had on your plate, I'm not sure you had time to plan a trip out to my home state of Washington yet, but I wanted to reiterate my invitation to you to come and visit. Between Hanford PNNL, we have a lot of facilities I think that you would benefit from seeing and a person to understand their importance. And thanks to the Economic Recovery Act and the Omnibus Bill that we passed last night, the face and footprint of those facilities are going to be changing dramatically. So I again invite you to come out and see firsthand those facilities.

The presidential priorities for clean energy really are exciting, and I'm delighted that we are looking at the future and how we need to plan for that. But as you and I have talked about previously, we can't forget our past if we look at our future, and cleanup is obviously not as flashy as some of the great new energy proposals out there and the other missions. But it has to be a priority of your agency, and I want to make sure that we agree that the federal government has a moral and legal obligation to clean up those sites across the country, and I need to know that you're with me when it comes to buckling down and focusing on the hard work of cleanup at the EM sites, like Hanford, which is in my home state.

The funds that were provided in the Economic Recovery Act and in the Omnibus Bill that the President is going to be getting shortly were really designed to help us get back on track towards stable annual budgets, because we have seen four years of decline in these budgets, and it's been an annual battle here that we should not be into. And I wanted to ask you this morning while you're here how you plan to build upon the gains that we made for the EM budgets in the -- in FY '10.

MR. CHU: Well, first, I think the Department of Energy -- the Department of Energy I don't think -- the Department of Energy has legal and moral obligation to clean up the Cold War legacy. As you know, I argued in -- within the Administration for substantial funds requested in the Economic Recovery Act. And so I was very pleased that --

SEN. MURRAY: We appreciate that.

MR. CHU: -- we were given those funds, and we are working a pace at trying to deploy those funds as quickly as possible to really add a big kick to the cleanup obligations we have. I also -- I'm anticipating going -- the future -- stable budgets for that, and so -- and we are planning to come visit the state of Washington.

SEN. MURRAY: Oh, you are? Great. Well, I'm delighted to -- you're going to be at Hanford and see our PNNL site while you're there?

MR. CHU: I -- well --

SEN. MURRAY: You haven't made all those plans yet?

MR. CHU: Certainly -- I'll --

SEN. MURRAY: We'll help you plan. (Laughter.)

MR. CHU: Well, you can help me plan. (Laughs.)

SEN. MURRAY: (Laughs.) All right. Well, good. I -- (laughs) -- appreciate that.

MR. CHU: That would -- (laughs) -- be great if you could help us --

SEN. MURRAY: Okay.

MR. CHU: -- but you'll be hearing from us very shortly actually.

SEN. MURRAY: Okay, great. Well, let me just say that the economy recovery plan whose focus is on the EM sites nationwide to reduce their footprint so that we aren't paying the continual cost every year is very important. But it's also important that we have stable budgets every year, and we are working with the Administration to get a funding level of $6.5 billion for FY '10 so we can continue the important work of doing the cleanup at those sites. So I hope that you will work with us as we move towards that.

MR. CHU: You know, I agree with you. Those are my goals. I should also say that I'm spending a lot of attention on, you know, this money to use as wisely as possible. There have been in the past some cost overruns, and we are taking steps in order to make sure -- ensure that the projects are better managed, both in the Department of Energy -- but the project managers on the sites. And so we're looking very hard at that. So it's not only the amount of money, but we want to raise the level at which it's -- you know, the effectiveness in which we use that money.

SEN. MURRAY: Okay, well, we look forward to working with you on that. Let me ask you about the National Labs, you know, given your background. Those are very important to you. Washington State is the home to the Pacific Northwest National Laboratory. That is a very unique lab. I hope you have time to see it while you are there. It has a lot of diverse capabilities from chemistry, energy, homeland security. It's actually home to (MSOL ?), which is an Office of Science Additional -- National User Facility. And PNNL actually is not only in Central Washington at the Hanford site, but we also have a site up on the Olympic Peninsula where we have the DOE's only marine science lab in the nation, and it's located in Sequim.

I know that you must be as pleased as I was that congress funded the Department of Water, Power program at $40 million in the '09 Omnibus Bill. That's a huge increase for that program, and it covers many areas of water, power, research, from emerging water, power, technologies like marine and hydrokinetics to conventional hydro power. The Pacific Northwest is a premiere region for hydro power, and continued innovation in that arena is critical, I believe. Can you talk to us about your vision of hydro power as we talk about the future energy use of the nation?

MR. CHU: Well, I think hydro power is one of the cleanest sources of renewable energy that we have. I don't know what to extent -- many people tell me that it's largely developed. I would actually like to see hydro power being used as pump storage so that we -- this is using the electricity generated from wind turbines, from solar to actually pump water back up into the dams, and then to release it back into a holding pond below so that you can actually store the renewable energy. This is a technology that the world is currently using, and I see hydro -- and particularly, the Pacific Northwest -- we've already begun discussions in the Bonneville Power Administration on how we can incorporate it in an environmentally responsible way, pump storage, because we will need storage mechanisms as renewable energy grows. So I think -- I'm a big fan of hydro.

SEN. MURRAY: Okay, great. And just quickly, in my last 30 seconds -- I had mentioned the Marine Science Laboratory at Sequim. They can be a real asset to your agency when you look at R&D. They are looking at a lot of really new technologies in our Marine areas, and I know when you come out to Washington State -- it's a big state. You won't be able to get to everything, but I do hope that the Marine Sciences Laboratory is a part of looking at some of this future energy -- we have a lot of ocean out there that we can use if we have the technology to be able to use it.

MR. CHU: Very quickly -- I'm not sure my time -- the time is running out, but very quickly, I just want to say I do have a soft spot for the national lab system. I was actually -- when I was at Berkeley as a graduate student in post doc, I was also an employee -- Lawrence Berkeley National Laboratory during those six years. And the national lab system is an incredible asset to the country. I know the -- (inaudible) -- is better for Berkeley Labs, so at the chance of sounding more provincial, I would have to say that Berkeley Lab has trained over 30 young scientists, students, post docs, young career scientists who later went on to get a Nobel Prize.

SEN. MURRAY: Wow.

MR. CHU: And if you -- I don't know what the number is of all the national labs, but they're an incredible asset to our intellectual strength, and anything that will not only protect, but enhance their capabilities I'm all for.

SEN. MURRAY: Okay, thank you very much. Thank you, Mr. Chairman.

SEN. CONRAD: Thank you.

Senator Crapo.

SEN. MIKE CRAPO (R-ID): Thank you very much, Mr. Chairman, and Dr. Chu, I also welcome you here.

Before I get started on my questions, I just wanted to mention my disappointment -- and I'm sure you share it -- over the incident that we were notified about last week concerning the loss of personal information of about 59,000 current and former employees of the Idaho National Laboratory. I know -- and I hope that your department will continue to follow up on efforts to protect the credit histories of those individuals and encourage you to do everything you can to make certain that we protect against this type of incident in the future.

I want to come back to nuclear, as you may have suspected. I strongly support the comments that have been made by my colleagues, Senator Gregg, and by my colleague, Senator Murray, with regard to both the environmental management side of the issue, as well as the advanced movement forward on nuclear power. I know you've already indicated your support for nuclear power. I wanted to point out that -- as you're very well aware -- in August of 2008 when you were the director of the Lawrence Berkeley National Laboratory, you, along with the other directors of our national labs signed a report called the Sustainable -- A Sustainable Energy Future: The Essential Role of Nuclear Energy.

And Mr. Chairman, I'd like to submit a copy of that report for the record.

SEN. CONRAD: Without objection.

SEN. CRAPO: Thank you. And the reason I wanted to do that is simply to make sure that the record shows the strong support that exists for nuclear power as a key part of our national energy policy. Senator Gregg has talked about the need to focus on making sure that nuclear power is treated properly in the budget and that we focus on the loan guarantees and the licensing. That report also laid out a very aggressive nuclear R&D agenda need that covers both sustaining the current reactor fleet, closing the nuclear fuel cycle, and expanding our nuclear power's reach beyond electricity.

And my question to you is -- these R&B activities require much significant funding. And I think they'll have a tremendous return on investment, but are you and the Administration committed to properly funding these R&B activities?

MR. CHU: The simple answer is yes. I stand by what I signed several years ago. As I said, I have a record of saying that nuclear has to be part of our energy mix in this century. I think closing the fuel cycle is something we do want to do. We do not know how to do it in its present form. I'm worried about its proliferation potential. And we should work hard at closing the fuel cycle to make it more proliferation resistant.

But in the long-term I think it's -- ideally, it would be a good step for several reasons. It has the potential for greatly reducing the amounts of nuclear waste with a small fraction of the reactors having higher energy neutron fluxes, that you can burn down the long- lived -- (inaudible) -- the waste materials. That would mean that you would have to -- (inaudible) -- for a million years. You can reduce it to hundreds of years. So that potential -- so both the advanced nuclear reactors that can do this -- and that's why we have to take a fresh look at the nuclear waste repository strategy as well. It's all incorporated in the strategy, which includes research into making fuel cycling, recycling a reality.

SEN. CRAPO: Well, thank you. I appreciate that. As Senator Gregg indicated, there have been sort of some subtle signals maybe just in the sense of lack of attention to the role that nuclear power can play and what we've seen already that have raised concerns. And so I hope that as we move forward and get specifics on the budget proposals, we can have a much more full explanation of the support for this kind of R&B.

I'd like to also go to the Yucca Mountain decision. I'm very discouraged by the decision that has been made by the Administration with regard to Yucca Mountain. And you indicated in your response to Senator Gregg that one of the things that could be done -- and while we're trying to figure out where to go now -- is dry cast storage.

As you're probably aware, that's not going to help Idaho. Idaho is the location of a significant amount of spent nuclear fuel that was not generated in Idaho. And the federal government has a binding agreement with our state to remove that nuclear fuel by 2035. And it takes a long time. If you're going to shift from Yucca Mountain now, I suspect that just simply putting the material into dry cast storage is -- I know that that's not a solution for the agreement that the federal government has with Idaho, and that we were going to probably look at a very long timeframe of whatever the next option you may come up with is.

And so I guess the question I have to you is how will you resolve the issues in terms of managing this spent nuclear fuel at Idaho and the federal government's obligation to take possession of that fuel?

MR. CHU: Well, we do have an obligation -- my understanding is by 2035 it should be ready to ship out, and I'm hoping after -- I don't want to pre-judge what this Blue Room panel might determine, but again, let me reiterate that this is -- will be done this year, that we can move in a way that would not take as long as previous experience.

SEN. CRAPO: Well, I hope you're correct about that, and frankly, a lot of the research that's being done at the Idaho National Lab, as you've just indicated, could help be apart of that solution.

MR. CHU: Right.

SEN. CRAPO: And although I'm very discouraged in the decision that we've seen, I think we need to get very aggressive at finding a path forward.

I've got a couple of other questions. I've got about a minute left. One question I had is -- as we were doing the -- pursuing the stimulus package, one of the provisions that was in it was a manufacturing tax credit, which, again, talked about a lot of different forms of energy, but it did not specifically mention nuclear energy. As we revised the bill on the floor of the Senate, we were able to change the language there, not to mention nuclear specifically, but to give the authority to the Department of Energy to include nuclear power in that manufacturing tax credit.

I just wanted to make sure you're aware of that, and also to receive your assurances that nuclear power will be able to be receive that manufacturing tax credit as we move forward.

MR. CHU: I'm not actually aware of the exact details, but I'll certainly look into it. And if it's allowed, they will certainly be eligible.

SEN. CRAPO: All right. Well, thank you very much. One last question. In President Obama's fiscal year 2010 budget request, he assumes 100 percent auction of allowances under a cap and trade legislation proposal that -- 20 percent or $150 billion over ten years is directed to clean energy technologies, including biofuels, renewable energy, and so forth. Can you expand a little bit on what clean energy technologies will receive funding from this proposal and whether nuclear energy will be included there?

MR. CHU: Again, I'm not sure of the exact statutes, but let me tell you what I understand it's going to be. Biofuels is an example. Clean energy biofuels is what I call fourth generation biofuels of -- where you don't -- you put in far less fossil fuel inputs into the lifecycle of generation costs. Advanced batteries -- we do not have batteries that can last 15 years of deep discharges that -- we need probably a factor of two or three higher energy densities before I could see a massive deployment of plug-in hybrids, and then even a better battery for all electric vehicles. Those are examples of clean energy technologies.

SEN. CRAPO: Would nuclear be included, in your opinion?

MR. CHU: I would have to look again at the statute, quite frankly. You know, nuclear is -- you know, it's -- we have still a nuclear waste issue we have to overcome, and we have -- but, you know, if you look at the palate of our base (loaded ?) electricity now, it's gas, it's coal, it's nuclear.

SEN. CRAPO: Well, thank you. I see my time has run out.

SEN. CONRAD: Kind of snuck an extra in on me there.

Senator Cardin.

SEN. BENJAMIN L. CARDIN (D-MD): Well, Mr. Chairman, first, thank you for holding this hearing, and Secretary Chu, it's a pleasure to have you before our committee, and I also add my thanks for your willingness to serve our nation in this critical role.

Our energy policy needs to achieve two objections: One, energy independence so we're not as dependent upon foreign sources of energy, and secondly, we need to deal with the global climate change, greenhouse gas emission issues.

So let me first deal with the environmental issues, and I want to congratulate the Administration for including the cap and trade proposal in your budget. I think that our energy policy can make us more secure, can help our economy, and can also improve our environment and make America a leader internationally. A cap and trade system establishes a specific goal on carbon reductions. And I think that is perhaps its greatest strength, that we know that on a particular day we will hit particular goals.

It also with the trade system allows the market forces to work. We would have the capability of looking at vulnerable consumers and making sure that they're held harmless or that we deal with the adverse impact of a carbon cap on their lives. So it gives us that capacity.

But we have to get it right in that we want to make sure the market forces work, and we want to make sure that whatever rebates we do are -- we use the revenues. We don't injure the concept of allowing the market to determine the energy sources in the future. And I want to just underscore one point. A cap and trade is going to be friendly towards nuclear power because the carbon footprint on nuclear energy is rather modest.

And to my friends who seem to think this is a one-sided party issue, in Maryland we're moving forward with a new reactor because we need it in our state. And we have a governor who's a Democrat who supports this, and our delegation supports this. And we definitely believe that nuclear is part of the energy goal of America to become energy independent and to be friendlier towards our environment.

But we also need the revenues to invest. And I've heard my friends already talk about certain investments that we need. We do need to invest in the next generation of nuclear. We need to figure out how we're going to deal with clean burning goal as part of our energy solution in this nation. And we need to invest in new technology. So we need to get it right, and the revenues from a cap trade would allow us to do that.

Last week, we had the opportunity to meet with your counterpart from Great Britain, and he made a very interesting observation. He said the fact that Europe and England move forward unilaterally on climate change legislation was good for their economy. They weren't so concerned about what other nations were doing other than the international impact, that we have all to be together on it, but that this was good for the economy of Great Britain.

I just want you to comment for a moment, because yesterday we talked about getting healthcare costs under control because the long- term impact on our economy if we don't is devastating. We can talk about deficits all we want. We can't control healthcare costs. It's going to be very difficult for us to deal with the budget deficits in the future. If we don't deal with the energy issues, the impact on our economy could be pretty severe. So I just would like you to comment a moment as to how -- if we get this energy policy right, it's going to create jobs for our economy and help us grow.

MR. CHU: Well, I agree with you, and I agree with you and I agree with the British minister. I liken it to really a -- identifying something that is a common challenge not only in the United States, but across the world regarding decreasing our emissions on carbon, that this is a cause that all the world should be investing heavily in.

And so when you -- so what do we invest in? Well, we invest in -- in the immediate term weatherization of homes, but we invest in how to develop buildings, commercial and residential buildings that are much more energy efficient. Those investments go into the country where those buildings will occur. When we do that, what we're really doing -- and we spend 40 -- roughly 40 percent of our energy on building -- in buildings -- we will offload that expense. I mean, a lot of that -- precious dollars and paying for utility bills just goes up the smokestack.

And so what we're doing is -- we rebuild an infrastructure that -- in a new world where energy costs will be seen on the long-term to increase, and the new 800-pound gorilla in the room is climate change. And so while we're investing in -- on our -- to try to mitigate the more severe predictions that might occur, you are building an infrastructure that's much more efficient so that you don't spend as much -- (inaudible).

SEN. CARDIN: I'll just mention -- one part of that I hope is in public transportation --

MR. CHU: (Right ?).

SEN. CARDIN: -- because if we can get people to work quicker and friendlier, I can tell you particularly in this region it'll be good for our economy and I think less stress and heart attacks for the people who have to confront the traffic problems here in Washington and around the country.

I want to move to the energy independence for a moment, because you're specific on your goals on what you want to achieve on the environment. You're not quite as specific on energy independence. And I would just encourage you to establish goals, reasonable goals, as to how we can wean ourselves off of imported energy sources, particularly oil, and then have a way of judging whether we reached those goals. And using, as the President announced last week, the best science we have available -- to how we can achieve those goals and what we need to do as far as policies in Congress in order to assist in that regard.

I would just urge you to have some mechanism to achieve that. Some of us have offered suggestions in Congress, and we look forward to working with you. But I think it would be helpful if we could judge how we are achieving energy independence. We've been through this many times before, and we didn't achieve great results on energy independence. Let's make sure we get it done this time.

MR. CHU: Yeah, well, I think there are very specific goals. It's a double barrel thing. You use less and you create more transportation fuel onshore, but biofuels is a large part of that, and -- (inaudible) -- is --

SEN. CARDIN: Well, what I'm saying is we need specific goals as to how much oil we anticipate having to import next year, five years from now, ten years from now, and hopefully at 1.0, and that we have in place mechanisms to try to make sure that we achieve those goals.

Thank you, Mr. Chairman.

SEN. CONRAD: Thank you, Senator Cardin.

Senator Alexander.

SEN. LAMAR ALEXANDER (R-TN): Thank you, Mr. Chairman.

Welcome, Mr. Secretary. First, I want to thank you for your work on the America Competes recommendations to Congress, which I hope you find is a very useful blueprint over the next few years, and I hope we can properly fund it.

Second, I want to invite you, as I know you will, to come to the Oakridge Laboratory, particularly because of the renewable energy work there in which you've been very interested the last few years, and its alliance with the University of Tennessee on science matters. I think you'll find that especially interesting.

And without being presumptuous, I'd like to suggest a way that you could win another Nobel Prize, or someone could, and that would be to find a way to capture and deal with most of the carbon after it's been burned in existing coal plants.

You made some reference to this the other day in your Energy Committee testimony. You talked about post-combustion technologies needed to meet the climate challenge. I think you could understand the -- some of the skepticism around the table about the Administration's goals when it comes to nuclear and coal.

I mean, we -- my friend and fellow Tennessean, Al Gore, you know, could write a whole article about reaching low carbon goals in the next ten years without even mentioning nuclear power. And in his article in the New York Times in November, which is -- sounded like a blueprint for the Obama Administration, he said that the idea of recapturing carbon from coal was so unrealistic as to be imaginary. Do you agree with that?

MR. CHU: Well, golly, you're going to put me on the spot, you know -- (laughs) -- to disagree with my friend, Al Gore.

SEN. ALEXANDER: Well, he's my friend too, but that doesn't mean we're always right.

MR. CHU: Let me just say that I think there is a lot of ingenuity out there that we are going to have to try -- and I think there's a reasonable chance of success, quite frankly, in capturing a large fraction of the carbon emitted from coal burning plants. I want to say that we have to try to do this because no matter what the United States does, India and China will not turn their back on coal. They're building pulverized coal plants, conventional coal plants.

SEN. ALEXANDER: Yes.

MR. CHU: You know, one a week are the numbers I'm hearing. So if we don't develop this technology, you know, who will?

SEN. ALEXANDER: Well, there's strong environmental groups who agree with that point. I mean, the Natural Resources Defense Council makes that point, I mean -- and let's forget carbon for the moment, but we've got sulfur and nitrogen to think about as well, and it goes up into the air in India and we breath it in Los Angeles and Tennessee. So a gift to the world, it seems to me, would be during your time as energy secretary to find a way to get rid of carbon, which is the only remaining pollutant from coal that we don't know how to control.

Let me press that a little further. All the talk is about carbon sequestration and sticking it under the ground. I'm not a scientist. That seems unlikely to me for such a large amount of carbon. Isn't there more likely to be some biological or chemical process, such as the algae experiments that we've heard about that might produce a way to burn coal from existing plants and get rid of it?

MR. CHU: Well, first, there have been experiments going on now in -- %%%% geological sequestration of carbon, a couple of million tons a year in a few locations. I'm not --skeptical, quite frankly. I think it has to be done right. It has to be monitored safely in order to get the confidence of the American public. But we are looking at all sorts of ways. Algae is one of them. The downside of algae, quite frankly, is that you need a tremendous amount of surface area in order to capture a large fraction of the carbon dioxide where you pass it over algae.

SEN. ALEXANDER: But you also do for solar thermal power plants, if I'm not mistaken.

MR. CHU: That's --

SEN. ALEXANDER: You have acres of mirrors.

MR. CHU: That's true. But there are -- you can develop -- so the issue here is then you would have to port that carbon. The coal plants are more centralized in higher populated areas. And so you would have to -- one could imagine porting that carbon dioxide out of the cities where the coal plants are to some distant location. But we will be looking at all these avenues. We will further be looking at avenues in which you can grab carbon dioxide out of the air. Plants do this, and we'll be looking at ways in which we can -- there's a very tiny fraction. Plant grabs carbon dioxide out of the air. It grows into some biomass type of thing. Now when it's used, either it's burned or when it just falls and decays, the microbes recycle virtually all of that carbon back into the atmosphere.

SEN. ALEXANDER: Well, I'm --

MR. CHU: (Crosstalk.)

SEN. ALEXANDER: -- I'm very encouraged that you're in the position that you are. And to hear your testimony, it seems to me that so much of our discussion about climate change and clear air comes down to a carbon tax and renewable energy. And even if you're for both those things, given the size of our economy and India and China and what they're doing, it seems to me that sometimes we overlook the easiest ways to solve the problem. You've mentioned one, which is conservation and efficiency. To give Gore a little credit, he says that 40 percent of carbon comes from buildings. Well, we can probably agree on what to do about that.

But right after that comes nuclear. No one's mentioned this figure today, but it's 70 percent of our carbon free energy. So how could we even think about dealing with climate change without involving nuclear power? And if coal is half of our electricity, and it's American, and it's low-cost, and we've got more than anybody, and we're helping the world, it would seem to me that a mini Manhattan Project on carbon capture, as the National Institute of Engineering has recommended, would be a terrific goal for the new Secretary of Education.

MR. CHU: How about energy?

(Laughter.)

I agree.

SEN. ALEXANDER: I mean Secretary of Energy. I'm sorry.

MR. CHU: Yes. No, I agree. I mean, I agree with all the things you've said. I would love to invest more in carbon capture and sequestration of all kinds and turning -- taking the carbon from coal plants and turn it into cement and using the cement. It's going to be -- (crosstalk).

SEN. ALEXANDER: Do you plan to use the new ARPA-E, the Energy Department form of DARPA, for such things as making solar power cost competitive, finding ways for carbon capture, advanced biofuels, nuclear waste reprocessing? It seems if you had four little mini Manhattan Projects to deal with, those four things at ARPA-E in the next five years, that would transform the world's energy picture.

MR. CHU: I would love ARPA-E to invest in all of those things. And as you know, we are planning to expand it up.

SEN. ALEXANDER: Thank you, Mr. Chairman.

SEN. CONRAD: Thank you, senator. Senator Warner.

SEN. MARK WARNER (D-VA): Thank you, Mr. Chairman. And I'd also like to add my congratulations to Dr. Chu, and thank you for taking on this terribly important challenge. Let me first of all associate -- before I get to my question, comments of both Senator Cardin and Senator Alexander. I share, like Senator Cardin, the belief that nuclear power has to be part of the mix. And we in Virginia, like Maryland, are one of the states that are one of the furthest along in terms of adding new reactor capability. And clearly, we've got disposal issues, but I do hope it is part of the mix.

Echoing what Senator Alexander said, I also believe that, as I think you've appropriately pointed out, even should America move away from coal, India and China are not. So the Holy Grail is getting a cleaner way to grapple with coal. And I would simply point out, perhaps for your staff's review at some point, if we could do it post- burning, great. But if the sequestration option is still out there, we've got a brand new next generation coal plant being built in southwest Virginia where there is wonderful geological formations in terms of the ability to sequester. And I can't think of anything better than eastern Tennessee, southwest Virginia, West Virginia, places in Appalachia that started, and along with Pennsylvania, the development in the industrial age in America to develop the coal, to actually have the solution set come from that region as well. So I'd urge you and your staff to take a look at that facility as a potential beta site for a sequestration project.

Let me come back to one of my favorite topics, and that is how we're going to make sure that all that's on your plate is going to be done efficiently and effectively. I'm very excited by all the options that came out of the recovery plan, your weatherization activities, the smart grid, the green buildings, the loan program. The challenge, though, I think you've got is, as you use these assets, how do you get them out quickly, create jobs, but at the same time scale up these programs effectively.

One of the things that I was happy to see that you did that I'd love to see other secretariats do is I understand you hired a former McKinsey guy, I believe his name is Matt Rogers, to look at this. And I'd like you to describe a little bit what Mr. Rogers' portfolio will be on how we set up, not just from an Inspector General looking back standpoint, but how we make sure, on the front end of these programs and projects, we get it right in terms of protocols, procedures, and make sure that there's going to be appropriate financial oversight.

MR. CHU: Well, thank you for giving me this opportunity. Matt Rogers is wonderful. We have streamlined our processes, completely overhauled how we try to evaluate and get loans out the door. He's directly reporting to me on all of the economic recovery work that -- (crosstalk.)

SEN. WARNER: So he will not just be doing the loan portfolio? He'll also have -- (crosstalk) --

MR. CHU: He's part of --

SEN. WARNER: -- (crosstalk.)

MR. CHU: Right.

SEN. WARNER: -- all of the Recovery Act -- (crosstalk.)

MR. CHU: -- the auto, everything. And what is happening is that he meets every day at 9:00 a.m. with the people in his Department of Energy. What has been done today? And they have to report, and it has transformed the way the Department of Energy is moving forward. And so we're hoping to announce within weeks the first tranche of these loans. We are also looking very much -- to your question about how do you do this effectively that you prevent fraud, abuse, inefficiency. And so we are working with the internal DOE IG, also with the administration IG not to -- they've viewed themselves, perhaps, in the past as an auto function to look into things where there might be a suspicion of waste or abuse. But they're actually anticipating what might go wrong and start to plan as we get these things out and how to monitor it. So now they're becoming an integral part of the planning process as we release the money. We will be releasing them in stages and be looking very closely, because whenever there is a new flood of money, there is always a potential for it not being spent in the wisest way possible.

So again, this is a daily thing. I realized very quickly, in fact in my first week within starting, that I needed someone who was very, very good, who could help the Department of Energy respond, in a way, because we can't fail on this.

SEN. WARNER: Well, I just simply would add; I commend you for doing this. But I don't think some of your other colleagues who got equal challenge, particularly with the Recovery Act funds, have put in place the same kind of oversight. And I would love to see if you could perhaps share with this committee what kind of protocols across sectors that you've developed, because I think we need to make sure that it's not just kind of look back; got you, but we actually --

MR. CHU: Right.

SEN. WARNER: -- spend this money efficiently going out. And that brings me to the second part of my question, which is when we think about literally training up thousands of folks around weatherization, or as we look at how we're going to develop these smart grid initiatives, a lot of these resources are going to still be passing for through the states. And I hope that -- one of the things we've got to make sure is we start with common definitions. And my concern, as I raised with Dr. Orszag yesterday, is that we have the goal of job creation. But if Tennessee counts job creation differently than Virginia and differently than Alabama, we're not going to have common standards. And have you or Mr. Rogers looked at, as you drive these programs down into the states, making sure that we've got common standards across the various states?

MR. CHU: Yes. In fact, there are two parts of the question. First, common standards, but also how do you -- there's going to be a huge need in the weatherization program for competent, trained, certified energy auditors. So you establish a baseline. You have to actually go in a home and tell the homeowner what's the best way to invest money. It's one thing to create jobs, but we also simultaneously have to make sure that that actually decreases energy bills --

SEN. WARNER: Right.

MR. CHU: -- in a substantial way. And so we have already engaged in associations around the country, groups of mayors, and are pointedly asking them, as part of how we get the money out there, to let us know what you're training programs are for these auditors and how you're actually going to ensure that this money is well spent. Our job does not stop by just releasing the money to states. And the president has made that very clear to all the cabinet members.

SEN. WARNER: Well, I think you're going to find a lot of these programs you're going to want to continue. And even my colleagues that might not have supported the Recovery Act, they're going to want to make sure, as I, that we've got real accountability methods. And so doing this on the front end is terribly important.

My last point -- I know my time is expired -- is just that Senator Alexander also raised the issue of algae. Algae has wonderful opportunities in terms of as a biofuel. And I would commend your staff again to look at some of the research that's going on at Old Dominion University in Virginia on that issue. Thank you, sir. Thank you, Mr. Chairman.

SEN. CONRAD: Let me just say to my colleagues. We kind of have an issue now because we've got a little less than 50 minutes left, and we've got nine senators. I propose we go to six minute rounds unless anybody has a big problem with that. All right, let's do that. Senator Alexander -- Senator Graham, I'm sorry. Senator Graham is next.

SEN. LINDSEY GRAHAM (R-SC): Thank you, Mr. Chairman. Mr. Secretary, your testimony, quite frankly, has been more reassuring than the budget. And quite frankly, it's been more reassuring to me than the president's speech to the Congress a couple of weeks ago in the area of nuclear power. One thing I've learned from being a state that has a national lab in Savannah River Site, where we have a big DOE footprint, that the politics around energy are sort of like agricultural politics. They don't break along party lines many times. You have two senators on the other side who have talked about nuclear power as being part of the mix in their state. And I've had my problems with the last administration with environmental management funds of sort of stopping programs in the middle.

And so one, I want to applaud you for beefing up the environmental management budget so that people like South Carolina's Savannah River Site who have done some pretty aggressive things to reduce their waste footprint will not be left hanging, and so the more certainty the better. But quite frankly, what has been disturbing is that in the nuclear power arena, the $50 billion to support a more aggressive loan guarantee program was taken out of the stimulus package. Do you know why?

MR. CHU: No, I don't.

SEN. GRAHAM: Okay. Now, when the president spoke to the Congress a couple of weeks ago, he mentioned energy independence and climate change as two big issues for the administration. And he gave a list of solutions. He did not mention nuclear power. Do you know why?

MR. CHU: No.

SEN. GRAHAM: Okay. When it comes to the fuel cycle, are you familiar with what the French and the Japanese are doing in terms of recycling spent fuel?

MR. CHU: Yes, I am. They're using a technique the United States invented.

SEN. GRAHAM: Okay. Why aren't we using it?

MR. CHU: Because of the concerns of proliferation, and they are becoming increasingly concerned as well.

SEN. GRAHAM: Well, as I understand it, the Japanese just developed an $18 billion recycling -- do you think their programs are reckless?

MR. CHU: Well, quite frankly, I would have preferred if they -- they're talking to us now about a second recycling where they want to develop a more proliferation resistant one.

SEN. GRAHAM: Of all the European nations, what nation has met its C -- carbon emissions targets?

MR. CHU: Well --

SEN. GRAHAM: What's the only one?

MR. CHU: -- I think Great Britain has, but I may be wrong.

SEN. GRAHAM: I think it's the French.

MR. CHU: Okay.

SEN. GRAHAM: Eighty percent of their power comes from the nuclear power industry. And what I am concerned about is that if you're serious about climate change, there's a couple things you have to realize. It's never going to happen unless it's bipartisan. It's never going to happen unless there's some cost associated with going from carbon to something else. And the number in the budget is $646 billion. That's the revenue to be generated from the proposed cap- and-trade system the president has announced. How did we arrive at that number?

MR. CHU: Pardon? How did we arrive at what?

SEN. GRAHAM: The $646 billion in the budget set aside as a revenue stream from a cap-and-trade system.

MR. CHU: The details of that I don't know.

SEN. GRAHAM: Okay. A 100 percent auction of the credits --

MR. CHU: Right.

SEN. GRAHAM: My concern --

MR. CHU: I misunderstood your question.

SEN. GRAHAM: I'm sorry.

MR. CHU: The money was, yes, going to come from the credit -- (inaudible). The exact amount of the estimate I didn't know.

SEN. GRAHAM: Yeah. Well, somebody has to assume that a credit will trade at a certain amount to generate $646 billion. I'd like to know the formula they used. If you could get that to me, I would appreciate it. The one thing that disturbs me about the climate change proposal in the budget -- and the president is pushing -- that 100 percent auction of the credits will, I think, make it very difficult for a heavy energy user/ manufacturers -- and all over the country, Michigan, Ohio, South Carolina, and other places -- to basically stay competitive in a global world, because their competitors in China and India are not going to have to deal with this issue. And I believe hedge funds are going to jump into this arena and affect the auction system to make it very difficult on manufacturers who employ a lot of Americans to stay in business. Is that a concern of yours?

MR. CHU: It would be a concern of mine if hedge funds jumped into anything at this point in time. (Laughing.)

SEN. GRAHAM: No, no, I understand. And I don't mean to put you on the spot, because I have a lot of hope that you'll really be good for the country here. But the 100 percent auction is a departure from other legislation that's been proposed that I think is going to make it very difficult for American businesses who are hanging by a thread in a global economy to comply. And when you take the revenue stream, and you put 15 or 20 percent of it into clean energy, and you can't tell me nuclear power is part of it, that's disturbing.

And when the rest of the revenue stream is going to pay for a make pay work tax program that I think is divisive, I think what we've done is destroyed the ability of the Congress to come together, because a 100 percent auction is a radical departure from the way we've set up other cap-and-trade systems that Democrats and Republicans have bought into. And dedicating the revenue stream to pay for a tax plan that is divisive is going to make it more difficult to find consensus on climate change. And the money going back into the energy sector that you can't tell me includes nuclear power is even going to undercut more the ability to solve the climate change problem, because I don't believe, quite frankly Mr. Secretary, and I think you probably agree, that you can be serious about climate change solutions unless you aggressively pursue nuclear power as part of the mix.

So that's more of a statement than it is a question. But at the end of the day, I have a lot of hope that we can find consensus on this issue. And I would urge you to talk with the chairman about his Gang of Ten proposal. I think it's very creative, and it's very bipartisan.

MR. CHU: Okay.

SEN. CONRAD: I thank the senator. Senator Merkley.

SEN. JEFF MERKLEY (D-OR): Thank you, Mr. Chair, and thank you for your testimony, secretary. The administration has set out a long- term carbon dioxide goal of 83 percent reduction by 2050, and I believe the number on the shorter term is 14 percent by 2020. There's a number of folks in the scientific community who have said we need to be more aggressive as a community of nations in the short term. Is the administration locked into this goal of 14 percent? Are they looking at strategies that might hit -- I think the common number is 25 percent globally by 2020? Is that a piece of the conversation about how aggressive we are in taking on global warming?

MR. CHU: I think the administration so far is just repeating what the campaign promises were. There are two numbers, 20 percent by 2020 and 25 percent by 2025. I would personally be delighted if we can reach 20 percent by 2020. I think -- but it's we also need to get there. And so, I mean, my heart is trying to get as much as we can out as quickly as possible.

SEN. MERKLEY: Well, and as we look at the variety of technologies, and people have spoken to various components of non carbon technologies or capturing carbon or taking and preserving -- using energy more efficiently, which is another strategy for reducing carbon. As one ranks these, what is the most cost effective strategy, or how do these lay along the curve under current technology?

MR. CHU: Oh, there's no question that energy efficiency, conservation is the most cost effective strategy. As I'm sure you know in the McKinsey report, a lot of the carbon decrease, the carbon abatement, will come in the form of saving money, if done right. And so there's no question in my mind. In the coming decades, most of the decrease in the carbon dioxide will actually -- should and must come energy efficiency and conservation. That is the lowest hanging fruit on the ground by far.

SEN. MERKLEY: How do the other technologies rank?

MR. CHU: Well, let's say that it -- if I'm thinking now down the list of things, better management -- first, the development of renewable resources is kind of in the middle. Efficiency is definitely the highest ranking. Better land use management is part of that mix.

SEN. MERKLEY: Let me be a little more precise. Discussion of solar and wind and --

MR. CHU: Right.

SEN. MERKLEY: -- nuclear, is there a fair sense of how those rank in terms of the cost?

MR. CHU: Well, again, it's based on today's technology and what we have --

SEN. MERKLEY: Based on today's technology.

MR. CHU: Right. Based on today's technology, I think that wind is more cost effective than solar photovoltaic or solar thermal, which is more cost effective than photovoltaic. So is that sort of -- nuclear is a very -- well, the full cost of nuclear are complex, but -- because of especially in this waste management issue. But nuclear is in there as it's being more cost effective than photovoltaic at the present time.

SEN. MERKLEY: When you take into account the entire life cycle of nuclear?

MR. CHU: Yes, but it's --

SEN. MERKLEY: I'm surprise, because I think the reports I've seen have seen that solar is almost half the cost of nuclear when you look at life cycle costs of generation.

MR. CHU: There's a little bit of an uncertainty in my mind about what the life cycle costs of nuclear are, especially since we don't have in place a long-term plan for how we handle its waste. So --

SEN. MERKLEY: Okay. You've mentioned the issue of the impact of reprocessing technologies upon nuclear proliferation. Of course, we're dealing with North Korea. We have a situation in Pakistan with an unstable government. It has at least 30 nuclear weapons. Can you expand on kind of what the point is you're making about how reprocessing ties into nuclear proliferation?

MR. CHU: Yeah. The current reprocessing technology, the so- called UREX technology that France is using and Japan is beginning to use actually separates out the plutonium. And once you separate out the plutonium and you have this material then, it offers the possibility that terrorists, for example, can get their whole hands on this stuff. And that's the proliferation problem.

SEN. MERKLEY: We are asking a number of countries around the world to forego reprocessing for that very reason. Does it create a challenge for us diplomatically if this is the strategy that we're pursuing here in the United States?

MR. CHU: Well, it's not the strategy we're pursuing in the United States. We're pursuing a strategy where we --

SEN. MERKLEY: But if we were pursuing that strategy?

MR. CHU: I -- (crosstalk) --

SEN. MERKLEY: You had mentioned it was a possibility that you were considering -- (inaudible).

MR. CHU: We're considering recycling, but considering recycling in a way that makes it proliferation resistant, okay, so you don't create pure plutonium. You actually put in other stuff, for example, that makes it less likely that you can make a nuclear weapon, quite frankly, much more radioactive so that it helps protect itself.

SEN. MERKLEY: (Laughing.) Just too dangerous to steal.

MR. CHU: That's right, that it would kill the terrorists within a very short time.

SEN. MERKLEY: Plug-in hybrids -- I'm out of time, but in the future, I would love to pursue that issue with you. Thank you.

SEN. CONRAD: I thank the senator. Senator Bunning.

SEN. JIM BUNNING (R-KY): Thank you, Mr. Chairman. Welcome, Secretary Chu. I'd like to get to cap-and-trade because he asked some of the questions I was going to ask about nuclear. And since I have son who has been working in nuclear power for 25 years, they have done it very successfully and very efficiently. And they store on-site their spent uranium and things like that, which is required right now since we do not have very many depositories to send it to.

Do you think that large-scale carbon capture and storage will be in use at any coal fired plants by the year 2012? Do you expect any new nuclear to be on line by 2012?

MR. CHU: Commercially, I think the answer is no to the first. There will be, I hope, pilot plants and test -- near commercial scale tests of carbon capture and storage by 2012. Nuclear power plants, this is up to the NRC. People tell me, starting today to 2012 to actually have a plant licensed and operating, unlikely.

SEN. BUNNING: Okay. If that is the case, then why is your administration proposing that we dedicate less than 20 percent of the auction revenues from this assumed cap-and-trade program to emerging technologies in clean coal and renewables and over 80 percent of its tax credit that not every citizen and certainly not every small business will qualify for?

MR. CHU: Well, when you have a cap-and-trade system, it will have impacts. And there is a sensitivity with the poor people in our country, and so there was a decision made that a certain fraction of it would try to offset the impacts. But a significant amount of that would be for investing in the development of new technologies so we can get it out there faster.

SEN. BUNNING: Thank you for bringing that up, because in my home state of Kentucky, 93 percent of our electric comes from coal, with 20 percent of my state's residents falling below the national median income. Can you tell me what the estimated increase in the cost of electricity would be in my state if the renewable portfolio standard, in its current draft form, went into law?

MR. CHU: No, I can't precisely tell you. I've heard estimates, for example, that there's a DOE study that showed if we get to 20 percent wind that it would increase the cost of electricity around the United States by less than one-tenth of 1 cent per kilowatt hour. I just -- (crosstalk) --

SEN. BUNNING: Well, first of all we have to overcome the technology about storage. And then if you produce the wind in South Dakota how we get it to Kentucky, or else the tax that falls on my state would not be very favorable and would be not offset by the fact that you're going to charge me for producing electricity from coal. And I'm going to have to worry about how you transmit your wind energy and your solar energy, because the technology does not exist presently how to store it.

MR. CHU: The technology, aside from pumped hydro storage, I would agree with you, senator. This is something we have to be investing in. But 20 percent will not really, in my opinion, require massive energy storage. That can be solved by a distribution system, which we need to develop concurrently.

SEN. BUNNING: Yes, which how many years down the road would that be, secretary?

MR. CHU: It would take a couple of decades to really flush out, but we have to begin today.

SEN. BUNNING: I don't disagree with you. I think that is absolutely essential, but you -- to get from point A to point B, you can't eliminate coal, and you can't do anything but clean it up. If we're going to have a global cap-and-trade and we're going to exclude China and India from the global cap, we could clean up to zero in the United States, and we still wouldn't get to the point where you and I both want to get to.

MR. CHU: I agree with you. I think, given where we are today, that's why I'm very -- I want to invest a lot in developing clean coal methods. It's going to take awhile to grow a transmission line system, to grow the renewable energy that we need. In the meantime, our base load generation for this decade will be coal, gas, and nuclear.

And so as we aggressively push the other issues, we have to -- and quite frankly, as I've said many times today, coal is going to be part of America's future in this century. There's no doubt about it.

SEN. BUNNING: I hope that your boss and your administration remembers that in the policies that they push in the Department of Energy and in any energy bill that we are going to address, like the renewable portfolio bill that is coming before our Energy Committee very shortly. It excludes any kind of clean coal technology or doesn't exclude it but doesn't emphasize it. And coal-to-liquids is completely left out. So I would hope that there would be some -- I've gone over my time. I'm sorry, Mr. Chairman. I will question later on.

SEN. CONRAD: I thank the senator. Senator Sanders.

SEN. BERNIE SANDERS (D-VT): Thank you, Mr. Chairman. Dr. Chu, welcome. First of all, let me begin by congratulating you and the president on your budget. For many years now, we've been talking about global warming. We've been talking about energy independence. But I think, for the first time in history, you guys have walked the walk. You're beginning to put the tens of billions of dollars that we need into weatherization, energy efficiency, sustainable energy. So congratulations for taking a significant step forward.

In this panel and on this committee this morning and as well as in many previous hearings, there is always a lot of discussion about coal and so-called clean coal as part of our discussion about nuclear, not a whole lot of discussion about solar, not a lot of discussion about solar. Solar shines in Kentucky and Vermont, occasionally, and the Southwest of this country, a whole lot. And in fact, I have heard people talking about the southwestern part of this country being the Saudi Arabia of solar energy, if you like. And I have talked to people who know a whole lot about this who suggest that the technology is there now today, that in a couple of years, we can be building numerous, solar thermal plants, which emit virtually no greenhouse gas emissions, stable long-term price. For the life of me, I just don't understand why we are not moving forward.

So my first question to you is, do you A, agree that solar thermal has potential -- I don't know if you've visited the Solar One, I think it's called in Nevada. They're producing electricity for some 17 -- 20, 000 homes, very quiet, there it does. And there are plants on line right -- not on line, but on the drawing boards that can produce electricity for 4 or 500,000 households. So do you agree with the potential for solar thermal? And B, what are you are going to do so that President Obama will be able to cut the ribbon for the first significant solar thermal plant in his first administration?

MR. CHU: I agree that solar thermal and photovoltaic have great potential. If you look at how much sunlight hits the United States and how much sunlight -- it's a very small fraction of our deserts could be generating at 20 percent -- (inaudible) -- all our electricity needs, if we could have a distribution and storage system that can handle that. So there is incredible potential. In fact, I did a quick calculation. We're talking about a few percent of the world's deserts that satisfies all the world's electricity needs. So ultimately, solar will be the answer, but the question is how do we get there.

I think solar thermal, right now for utility generation, makes more sense than photovoltaic. The last time I looked, it's about a factor of two less per installed kilowatt generation. There are some projects being discussed very actively. I think that we're looking at loan guarantees on some of them. And I would dearly love -- (crosstalk) --

SEN. SANDERS: If I could continue this -- I've just yesterday, as a matter of fact, talked to a couple of private sector guys who are prepared to put substantial sums of money into these projects. My understanding is that you can construct these things in several years at not an outrageously high price. Do you have optimism that within the first four years of the first Obama administration that we can be cutting a ribbon for a major solar thermal plant? Can we do it?

MR. CHU: Actually, well, I know -- and there's one in California being discussed very actively.

SEN. SANDERS: There are several. There are -- (crosstalk) -- on the drawing boards.

MR. CHU: Yeah, right. And I would hope so, yes.

SEN. SANDERS: But here's the point. They're on the drawing boards. I've been talking to people for several years, and I'm just getting impatient. I mean, will you make it a high priority so that we are beginning to build these plants, which have, as I think you've indicated, so much potential?

MR. CHU: Yes. (Laughing.) How's that?

SEN. SANDERS: (Crosstalk) -- "yes," not a -- a little bit too much wavering in that "yes." I mean, do you think we will have the --

(Laughter.)

I want to see the president cut the ribbon. I want to be there. Do you think I'm going to --

MR. CHU: In the next four years, I think there's a very high likelihood that we will -- (crosstalk.)

SEN. SANDERS: You think there's a high likelihood that we can do that, okay.

MR. CHU: But again, the details of this -- there are environmentalists who are resisting, as you may know.

SEN. SANDERS: I know that as well. And I think a lot of the problem is more financing than in fact technological and engineering, how do you get the money to these guys. And you indicated that in the budget, I think, we have $6 billion for low interest loans in the stimulus package, which presumably can be used for this. Is that correct?

MR. CHU: Right, correct.

SEN. SANDERS: Second question, the potential of photo voltaics, my understanding is that it's a question of scale; the more we produce, the more we use, the less expensive they become. Do you have any guess -- if we expand photo voltaics and start getting them out, and I think the stimulus package will help us do that, when do you see photo voltaics becoming competitive with more conventional forms of energy?

MR. CHU: You're right that the so-called learning curve, if you apply it on the y axis, costs per installed kilowatt hour and the x axis is the amount deployed, that as you deploy more, that naturally drives the costs down. And virtually all technologies follow a Moore's Law curve with regard to that. But there are times when you can fall off that Moore's Law curve. The way you fall off of it is -- because there's progressive improvements in driving the cost down and improvements in the technology that keep you on that Moore's Law curve. But you can fall off of it when you run out of improvements, and you can fall off of it if you actually too aggressively push it, because it takes time for those incremental improvements.

And so this is one of the issues. Again, I'm referring now to a Department of Energy report on when it would take, given the Moore's Law curve in investment in photovoltaic technology, when will it be competitive with fossil fuel. But the competition of fossil fuel is wholesale production.

SEN. SANDERS: Right.

MR. CHU: And that's a pretty high bar.

SEN. SANDERS: Right.

MR. CHU: And so, quite frankly, I think -- and this is where the universities and national lab systems can play an incredible role. I would love to invent dramatically better technologies than just driving down the cost of silicon photo voltaics.

SEN. SANDERS: Good. Okay, thanks very much. Thank you, Mr. Chairman.

SEN. CONRAD: Senator Sessions.

SEN. JEFF SESSIONS (R-AL): Thank you, Mr. Chairman. Dr. Chu, it's good to see you. I have great confidence in your abilities. And if you'll just sift through all these difficult issues and give us your honest evaluation of what makes sense, then I think that can be a big help to us. I would just say my philosophy is I'm willing to support any technology that works. I think we need to be more focused on actually getting the technology identified and into the system and actually producing rather than sustaining it with subsidies for ever and ever, because those are so expensive. But I really believe in the goals that we have here would be good for our economy, and I appreciate the abilities you bring to this issue.

With regard to the nuclear question that so many have asked about, I would just say I did notice in your written statement, you didn't mention nuclear in any significant way, and I'm glad your answers to the questions are more positive. So it leaves us all a little uneasy. That's why you're getting a lot of questions, because I know that's not the only answer, but it is a factor, I believe, unanswered to it.

With regard to the loan program, a number of us were critical of the Bush administration for not getting that loan program up. I think -- is it $40 plus billion available? And can you tell us to date how many loans have been made in that program?

MR. CHU: To date, exactly zero. But as I said, beginning the first week since I assumed my responsibilities, we've been looking very hard at this, and I hope in the coming weeks you will look upon the Department of Energy differently in how we can expeditiously assess these loans and get them out.

SEN. SESSIONS: Well, I just wanted you to say that zero, because it's not your fault yet. It soon may be if they don't get made, but it is unfortunate. It does provide some opportunities for loans for nuclear power, does it not?

MR. CHU: Yes.

SEN. SESSIONS: And you're not averse to allowing them to have the share that they're entitled to under this program?

MR. CHU: No.

SEN. SESSIONS: This Nuclear Waste Fund, the rate payers are paying about $750 million a year. About $26 billion have been paid into this fund, basically from rate payers who -- in their electric rate. And they were expecting, and the utilities were expecting there to be a site that they could store this waste. So you recognize, do you not, that if we don't do the Yucca, that you've decided not to do, if we don't do that we have a very real obligation to come forward with a positive plan. Maybe it's recycling, which I favor and have offered legislation to that effect, but some sort of plan that would break the log jam here of how to handle the waste.

MR. CHU: I absolutely agree with that. We have to come up with a viable plan that's going to be acceptable to our country, absolutely. And it has to be done in a timely manner.

SEN. SESSIONS: With regard to the renewable energy proposals and the mandates that are out being discussed and have been offered before, to me it only makes sense that if a utility -- maybe they're approved by the public service commission -- and they invest billions of dollars to build a nuclear plant and it takes, five, six years, seven years to get the plant up and actually operating. And they're spending billions of dollars on that, which would produce a plant that would, for 60 plus years, produce pollution free, CO2 free electricity, that they ought to get some credit for that, particularly in areas like my area of the country where the wind is not available. It's too cloudy. Sun does not work, and we just don't have the options. And so can we figure out a way that, in the portfolio standards, that we give some credit for a company that's investing billions of dollars in a clean energy source?

MR. CHU: I think you're raising very important points, and one of the things -- in fact the energy -- as I understand it, the Energy Act of 2005 addresses is the very long approval process where you're investing these billions of dollars. And not getting a return on investment for years is -- you've dug yourself a financial hole. And so one of the very first things that one has to do is to figure out how to streamline the process to make it much faster. Even a few years off means a whole lot for economic viability.

And so that is the strategy, the strategy of licensing. We have, in the past, every nuclear power plant was a one off, and there had to be a separate, detailed, safety evaluation by the NRC. And one of the reasons why France has been so successful in building up its nuclear potential is because they had very similar reactors. The old joke is when asked why France has nearly 80 percent nuclear and we have 20 percent, and the answer was in France we have hundreds of cheeses, one reactor. In the United States, you have one cheese, many reactors.

So we are trying to license a very limited set of new reactors. I mentioned the Westinghouse and the GE one as those. Once you license a generic reactor, then there's a much shorter time to license that particular site, and so that's one of the things we're working on. And I think in the Energy Act there was a -- if the licensing time went over a certain amount, that --

SEN. SESSIONS: You are analyzing that very clearly, and I appreciate it. I was just saying that the renewable portfolio standards could cost my companies and the whole Southeast region a lot of money, because we don't have the options that other areas have. But they would have to meet that at great cost while they're still trying to invest billions in a nuclear power plant, which is odd to me. Thank you.

SEN. CONRAD: Thank you, senator. Senator Wyden.

SEN. RON WYDEN (D-OR): Thank you, Mr. Chairman. Secretary Chu, I want to ask first about the question of the higher cost of fuel that you would see associated at least with some version of the cap-and- trade system. It's gotten to the point now, given the speed at which this issue is moving along, I've actually moved to adjust my tax reform proposal; it's called the Fair Flat Tax Act, just to start trying to deal with this question. So let me ask it this way. The administration proposes to use the make work pay credit to compensate people for the higher cost of fuel that comes about through cap-and- trade, and the more I look at this I'm concerned about how this would affect various Americans in different income brackets and I want to ask you a couple of examples about them.

The make work pay credit has a refundable section that's designed to reach low-income taxpayers, but based on my reading it wouldn't reach the very poor, the poorest among us who don't file a tax form and also are most vulnerable to higher fuel costs. So it looks, at least if you just look at the budget documents, the way cap-and-trade is set up now and tying it to the make work pay credit that the very poorest in our country -- the people who can least afford it -- are sort of left out. How would you deal with those people who don't file a tax return?

SEC. CHU: Well, I mean, in all honesty I (have ?) not devoted a lot of my time up until now on -- on that aspect of -- of what you do with the revenues. I think this is something that the administration should be in deep discussions with Congress be working out, and so you raise a very important point.

SEN. WYDEN: But you haven't gotten into it yet?

SEC. CHU: I personally have not gotten into how you deal with the revenue stream that you wanted in order to relieve some of the strains and the consequences of -- of a cap-and-trade bill.

SEN. WYDEN: I don't want to be harsh but I think the administration has got to get into this issue. I mean, these are the very poorest among us at a time when a lot of them feel like they're getting hit with a wrecking ball. I have one of the highest unemployment rates in the country. I see my friend, Senator Stabenow from Michigan, same situation. If we're talking about a major environmental initiative -- (inaudible) -- cap-and-trade is being discussed and climate change and people haven't thought through what this is going to mean for the poorest among us we got to put some changes in place to get at this issue.

SEC. CHU: Well, no, I was speaking about me. You know, I'm just a lowly -- (cross talk).

SEN. WYDEN: Well, who -- who is? You're the secretary of energy and you're --

SEC. CHU: That's -- that's true.

SEN. WYDEN: -- you're going to be -- you're going to be one of the key players in this debate about climate change and -- and I sure hope you all with get at it. Let me ask one other kind of substantive question on this. The cost of oil has fallen from about $150 a barrel to about $40 a barrel in the last nine months, and I think we all know it goes up and it goes down. How would the administration adjust the value of the make work pay credit in line with the rise and fall of fuel costs?

SEC. CHU: Again, at this point in my time for me personally I haven't given that much (your ?) these are things that other people in the administration I'm sure have had a great deal of thinking about this but --

SEN. WYDEN: Who are those people?

SEC. CHU: Well, I mean, their -- the -- the -- the people in -- I mean, more on the economic side of -- of what it is but -- but I certainly since -- and you're right, I am part of the administration and I have to get into those things as well. But again, my background is as a scientist, not as an economist and --

SEN. WYDEN: Could -- could you get back to me with answers to those particular questions?

SEC. CHU: Yes.

SEN. WYDEN: Because I -- I don't think those are the only income groups. I -- I have some questions. I'm for the make work pay credit. I mean, I think the president of the United States is trying to send the right message but we've got to think through the economic, you know, consequences here or a lot of people are going to get hurt, and can you have some answers to my questions, say, within two weeks?

SEC. CHU: I'll certainly try and send it.

SEN. WYDEN: And if you would send those through the chairman and the ranking minority members so that all members of the committee could have it that will be helpful. Thank you, Mr. Chairman.

SEN. GREGG: I thank the senator. Senator Enzi please.

SEN. ENZI: Thank you, Mr. Chairman, and Mr. Secretary, I am very impressed with your answers and your range in knowledge and all the -- all the things that you said here today and particularly your emphasis on energy research, and I realize from your background that that would be an emphasis. But Wyoming is particularly interested in the research and have made some huge commitments to -- to research. One of their commitments is -- is based on abandoned mine land money. There was a tax that was going to expire about three years ago and of that tax half of it would go to solve abandoned mine land problems in the East and half would be returned to the state where the coal was dug to take care of the abandoned mine land projects.

And Wyoming was one of the states and went ahead and solved a lot of those projects even before the government released the money, which they didn't do for about 30 years, and since the coal tax was going to run out we got together an interesting coalition of people and extended that tax but with the promise that that money would be coming back to Wyoming someday and that's what the legislature has committed to energy research for our state. Now the budget calls for eliminating the return to the states that in good faith made that operation and one of the things I'm worried about is in the future if we're putting together unique coalitions like that if the government will be trusted if that happens, and I was hoping that you might take a role in seeing that our research money continues to come.

It's money that was stolen from Wyoming for 30 years before we were able to get a release on it so it is a fairly big chunk of money now. But if it doesn't come through we won't be able to do the research that the state has already obligated to do through 2011. So I -- I hope -- my -- my question is will you help us play a role in that?

SEC. CHU: Well, I'll certainly look into this and get back to you on that.

SEN. ENZI: Okay. I appreciate it and I understand that that would be best you'd be able to do at the moment but I'll -- I'll look forward to visiting with you some more about it. I'm a huge advocate of incentives working better than penalties although recognizing that sometimes penalties need to be in place because there are bad actors. One of the incentives that I hope we can do in -- in energy is -- for cleaning up energy -- is to put some provisions into federal law so that companies can be assured that if they do research and find things that work and add it to their plants that it can go into the rate base right away, and I -- and I suspect that there are some other incentives that could be placed on that.

One of -- one of the biggest questions I have now is will we be able to get a return on the cost that we've got. It's my hope that you would help promote that sort of thing and that would be my question -- that and maybe you know some other ways that we can provide incentives that will get people on board with cleaning things up.

SEC. CHU: Well, Senator, I actually agree with you. I believe more incentives than regulatory pushes. The rate base is determined by, as you know, the regulatory agencies. Historically, those agents -- the regulatory commissions have felt that there was -- there was a single criteria. They -- they were advocates for the consumer.

Now as we enter into this new era of the specter of some consequences of climate change we -- we don't want to see happen, we -- there's -- there's another issue on the plate as well and so -- so I would like to see the regulatory agencies -- that these are local, you know, within states and sections within states -- begin to fold in these other concerns.

SEN. ENZI: Except that we're about to make it a federal -- a federal issue and a federal tax because we're talking about cap and -- cap-and-trade which is a tax and that tax will be passed on to the consumer, and in the budget I noticed that yes, some of that is going to go to energy research and I think that's tremendous and provide maybe an incentive. It's kind of a back end sort of an incentive. But a portion of that is going to cover the increased taxes the people will have on the energy, which does give some recognition that it's the consumer that's going to -- going to pay the taxes.

I -- I thought that the purpose of a cap-and-trade was to have all of the money that was coming in from whatever was being taxed would go toward the solution of that tax. Does your department have any -- any role in how that's divided up?

SEC. CHU: I think the recognition that a significant part of the money goes to offset the, you know, the economic consequences -- (inaudible) -- poorest parts of our population is important but I also simultaneously believe that the money going into research and development so we can get much better solutions than we have today is actually essential. And so it's -- it's really what's the proper balance.

SEN. ENZI: My time has expired. Thank you, Mr. Chairman.

SEN. GREGG: I thank the senator. Senator Stabenow?

SEN. STABENOW: Thank you very much, Mr. Chairman, and Secretary, welcome. I appreciate all of your efforts to date. I know you've come in with many different challenges to face so we appreciate that and look forward to working with you as we implement the recovery package. One of the -- and move forward obviously on the energy bill and -- and cap-and-trade and so on.

One of the things that I'm very pleased about is that in the energy bill in addition to investing in batteries, which that technology development is so critical, but the 30 percent manufacturing credit, the exemption of the investment tax credit, production tax credit, the connections to a grant program for those not currently making a profit I think are all important steps in the right direction on financing and showing that there are jobs in the new green economy, which I think is critical in order for people to feel good about moving ahead and what we need to do as it relates to carbon.

My question goes to the broad issue of financing because in the budget the president has placed $15 billion per year for new clean technologies, which I commend. But it is tied to the cap-and-trade program and it's tied to a policy of 100 percent -- 100 percent allocations or -- or (auctions ?), I should say, and which I think is unlikely actually to -- to actually happen and certainly will not happen until down the road. Right now we need financing. We have Section 136, which I was pleased to be the architect of, and we need to certainly get those dollars out as quickly as possible, loan guarantees and so on.

But I wondered if you might speak to a willingness to work with us on a financing mechanism. We've talked about it in the Energy Committee, at your hearing. The chairman of the Energy Committee is talking about an effort to put together a clean energy fund financing mechanism. It is so critical that we not wait if we are going to take advantage of the opportunities that we have right now and, frankly, opportunities that I believe are moving quickly away from us overseas and that we -- we have to grab on to.

When we look at our competitors around the world and their capacities like Korea, to have financing mechanisms that draw people there, or Germany with major manufacturing tax incentives and so on, which we're beginning to address, I think it's absolutely critical that within the confines of this budget we are focusing on clean energy financing not tied to something down the road but something that we can begin to do right now, and I wondered if you might speak to that.

SEC. CHU: Well, I -- Senator, I do agree with you that the nurturing of American industry into developing clean energies is very important. I personally have witnessed as I begin to get more and more into this energy problem how when you look around which country has the lead technologies surprisingly fewer and fewer of them are in the United States and this is very troubling, and I think we have to develop mechanisms to encourage the United States to -- to regain the lead in many of these advanced technologies -- technologies -- (inaudible) -- you know, over the last period of time we invented many of them.

And so in terms of the long-term investment in the research, the development, the innovation is something that is very important and -- and I will certainly hope to work with you and the rest of the members in Congress in making sure that that continues. We -- we have incredible intellectual talent in this country and we need to adjust the conditions to -- to really nurture that intellectual capacity and to the point where -- where industry, the private sector, is actually investing in these technologies. I -- that I would well be working with you on that.

SEN. STABENOW: Thank you. As a follow-up I mean, we certainly know that in the capital markets we are in right now it's done nothing but make it worse. There's no question about that. We have a number of very important projects that have applied through Section 136, some on battery technology where literally we are -- we have a window of opportunity of months before those go overseas.

In fact, I know of situations where depending upon our financing decisions will be made to bring proposed plants back from Korea or other countries. I mean, we -- but we are in a very small window of time before those investment decisions will be made. So I'm wondering if you can update us on Section 136 and how quickly we can see the loans be given.

SEC. CHU: Right. You know, I share your sense of urgency on these and I -- I do know those issues and as I said before, you know, since assuming these duties (that are ?) taking this as my highest priority is to how to -- how do you actually streamline the process and -- and this is being done, has been done, and so hopefully in the next few weeks you will hear some very good news.

SEN. STABENOW: Well, I appreciate that. I know it's your priority and I would just -- I support it and emphasize I think it's absolutely critical to achieving the broader goals of showing that turning to a new green economy actually creates jobs. Thank you. Mr. Chair?

SEN. GREGG: Thank you, Senator Stabenow, very much. Senator Whitehouse is next and then Senator Nelson.

SEN. WHITEHOUSE: Thank you very much, Mr. Chairman, and welcome, Secretary Chu. The last time we met was February 4th when you were at the caucus and I handed you a letter concerning increasing the contract ceilings under the DOE's super energy savings performance contract program, which has hit a contract ceiling but there's a lot of work ready to go on federal buildings. It's been estimated that it's $2.2 billion worth of what everybody would call shovel-ready stuff. In the past, for the technology-specific photovoltaic solar contract the ceiling has been lifted. Is this something that you can lift? We haven't had a response from this letter and -- (cross talk) -- find out -- (cross talk).

SEC. CHU: Oh. I'm sorry. Are you talking about the -- the ESPCA's (ph), the energy savings --

SEN. WHITEHOUSE: Yes.

SEC. CHU: Okay. Actually I looked into it and I signed a waiver I think three or four weeks ago that said because of this that there was a very good response to those and we had gone over the previous limit. We looked into it. There's a 30 -- I believe there's a 30-day waiting period. We've -- if you didn't get the information I apologize but I actually signed the waiver maybe two and three weeks ago on that.

SEN. WHITEHOUSE: Wonderful. So we succeeded.

SEC. CHU: Yes.

SEN. WHITEHOUSE: Thank you. Hurray. I was delighted to hear you mention over and over again your observation that so often this is U.S. technology, and the development of it into marketable products has moved overseas. I was in Spain at a solar array that is generating electricity right now and the technology was developed in the United States. It was developed pursuant to a U.S. DOE grant. Because they had feed-in tariffs over there that's where they developed and that's where the technology solutions were put together to make it a marketable product, and now they're lined up to build the product in Arizona.

So U.S. technology, U.S. funded, and a U.S.-built project had to be essentially laundered through a foreign country in order to bring it to market here. I think what that suggests to me among a lot of other examples is that your job at the Department of Energy is obviously to a certain degree a technological job but it's also very much an economics job. If we can, as you said, address the conditions for technology development we don't have any shortage of ideas or talent. We just have economic signals that discourage this.

The area that worries me the most is conservation, which as you said is the most effective bang for the buck on energy, and -- however, it's very hard to find -- to make it sexy for an investor the way a new technology might make somebody a million dollars. Conservation (caulking ?) you know, it's not all that new tech, and the people most likely to be involved in this are the electric utilities for whom it's a real challenge to their business model which is to sell kilowatt hours of electricity. And I'm wondering what your thoughts are on how you adjust the conditions so that conservation becomes not only cost effective for us as a nation but cost effective and economically productive as an activity for individuals who participate in it because we're way, way, way behind the curve, and I'd like you to touch a little bit on what you feel about whether you might have something to do with the Federal Energy Regulatory Commission.

We used to have utilities and now they've been busted up into distribution companies, transmission companies, generating companies. No reason we couldn't also have conservation companies so they -- but it would take some regulatory activity to force that. So if you could talk a little bit about conservation, changing the economics, and the regulatory role in that and your coordination with FERC on that.

SEC. CHU: Sure. Okay. So let me start with efficiency and conservation. There are I think -- I think there are a number of mechanisms that should be piloted. A lot of times if you consider the building of a commercial building there's --there's an architect, there's a -- (inaudible) -- there's the person who builds the building that -- it's rare that the design, the operation, the maintenance of the building, the whole life cycle of the building is under one roof the way it would be, for example, in a government building or a university building and (they changed hands ?). Because of that there are very split incentives.

If you want to invest 5 or 10 percent more to make a much more efficient building it doesn't really (serve it ?) so -- so we've got to figure out a way in order to distribute the incentives. One of them might be in the first 5 or 10 years the operation of the building based on performance of that building that if it exceeds a certain amount that a sharing of both could be a local slight decease in the property tax of the building. It could be a -- when you see a decrease in the operation or the decreased utility that you provide an incentive to make sure the contractor, when they do the value engineering when they're actually building the building, that the first thing traditionally has dropped off the plate are the things that give you more energy efficiency.

So there are things of that nature. In residential homes I would like to see the banks ask that the last year's gas and utility bills are, you know, a counterfeit-resistant copy of that is presented. Why is that relevant? Well, it's relevant because if the utility bills are $400 or $500 a month that actually has a significant impact on one's ability to pay a mortgage, just as termites in the home would have a significant impact.

So you can have this is the bill and for this size house in this region of the U.S. which (it's ?) all could be on record a mixture of the utility bills plus what we know about the size of the homes from the property records that there's a distribution, just like in a refrigerator when you buy a refrigerator there's a distribution of energy, and here's (an arrow ?) where this house is. So it becomes a -- it creates a more informed buyer and encourages the current homeowner to make investments in energy efficiency because it increases the resale value of that home. So they're -- those cost the taxpayer very little -- nothing essentially. But they're -- these little tools can be used and so a number of them and one can -- I can go on about this because I've -- (inaudible) -- a great deal --

SEN. WHITEHOUSE: I'm running into Senator Nelson's time at this point. So let me cut you off and just say I look forward to continuing to have discussions with you about your role as secretary of energy economics.

SEC. CHU: Okay.

SEN. GREGG: Senator Nelson?

SEN. NELSON: Thank you, Mr. Chairman. Good morning, Dr. Chu. Last evening, Congressman Bart Gordon, the chairman of the Science and Technology Committee in the House, released a GAO report that says that a carbon-capture coal project called FutureGen, which was killed by the previous administration, was in fact done on a miscalculation, and this is chronicled this morning in The New York Times and let me just read a couple of paragraphs here.

"The error led the Department of Energy to say mistakenly that the project known as FutureGen had nearly doubled in cost, an increase the Bush administration deemed too expensive. At the time, FutureGen was the leading effort to capture and sequester carbon dioxide, the main heat-trapping gas linked to global warming. If the project were resumed and proved successful, it could prove a model for curbing the carbon dioxide that coal adds to the atmosphere."

What do you know about this mistake that the GAO has come out with in the report and who's responsible for it, and what are your future plans with FutureGen?

SEC. CHU: My understanding is the following. When the price was first put on that project, it was a price of this is what it would cost in, you know, whatever time it was, '04 or '05, dollars and -- and it did not include the fact that as you go forward in time -- (inaudible) -- the construction time of the project -- let's say it's three or four years -- that you fold in inflation costs, the -- the increase in cost of the commodities that would put in the plant. So it was in dollars times zero and the real cost of any project has to fold in those increases.

SEN. NELSON: As a matter of fact, The New York Times says that they -- they said in canceling the project that it had increased from 950 million (dollars) almost doubling to 1.8 billion (dollars) but in truth the auditors in GAO said it had gone up 39 percent to 1.3 billion (dollars).

SEC. CHU: Yes, and that's precisely this -- the proper costing of any project has to include what you see as trends in the costs of the materials and during the time and so that was part of it. Now --

SEN. NELSON: Well, that's a pretty big mistake. Who -- who made that mistake?

SEC. CHU: Well, I'm not responsible for that.

SEN. NELSON: No, but you have some ideas.

SEC. CHU: No, actually I don't, quite frankly.

SEN. NELSON: It's the previous administration. So you don't -- you're going to just plead the 5th then. Okay.

SEC. CHU: Well -- (laughter) -- I don't think -- let me just say that on my watch I hope we don't make a similar mistake. There has been in addition to the 1.8 (billion dollars) there have been estimates that it's gone higher. Now, having said all of this, I began to look very closely at this project. I think there's a lot of merit in -- in really testing the gasification, the capture, and the sequestration all in one unit.

The current price as I understand it is still very high. As I've said in previous comments we have to -- we have to -- I think it -- it does make a lot of sense to test this idea but we also have to spend a lot of time and attention on post-combustion capture. And so I am actually personally looking into how do you bring down the cost so we can go ahead and -- and, you know, so at this time that's -- it's -- there are many things as you've probably noticed that have gotten a lot of my attention and there's only 36 hours in a day and so I'll do my best.

SEN. NELSON: In your opinion, does this technology -- is this promising to get a complete capture of carbon?

SEC. CHU: Actually it's a technology that is certainly worth testing, in my opinion. The complete capture of carbon is -- is a different story. There are (price needs ?) on what one can do and so you have to look at cost benefit analysis of, you know, as alluding to the senator's comment about the secretary of energy and economics -- that once you do a cost benefit analysis I think future technologies going forward will help us capture more and more of the carbon but if we -- if we lay out a plan that says we've got to capture 95 or 90 percent and makes it prohibitively high that will begin to delay -- that will delay the first experiments in deployment, and I'd rather (seen ?) it getting started.

SEN. NELSON: Well, good luck because we do have a lot of coal and if we can stop carbon going in the atmosphere it's certainly to our advantage because of that energy source. I know you all talked earlier and I've just got a little bit of time left. I just want to put my marker down that I have no objection to offshore drilling if it is done responsibly and if it is done where the oil companies already have leases.

There are some close to 80 million acres under lease. I know that there are 33 million acres under lease in the Gulf of Mexico that have not been drilled. I'm talking about 80 million acres that hadn't been drilled -- you know, 33 million acres under lease in the Gulf of Mexico that hadn't been drilled. And, of course, I've been the point on this trying to protect the U.S. military's interest in the eastern Gulf of Mexico of which the operative policy in the Department of Defense is that you can't have oil rigs out there where we're testing and training and testing some of our most sophisticated weapons.

So as you approach this, you and Secretary Salazar, I want you all to be mindful of the balance of issues, and also I don't think nuclear has been brought up here at this hearing. Clearly, after -- after Three Mile Island we now are a lot safer with nuclear and should be able to tap that source in a safe and responsible way to meet our energy needs in the future. I know my time is up but any comments we'd love them.

SEC. CHU: Nuclear is going to be part of our energy future and it has to be. And the issues you raise are very important ones and that is correct, there's a lot of oil leases out there that are not being used.

SEN. NELSON: Thank you. Thank you, Mr. Chairman.

SEN. GREGG: Thank you. Thank you, Senator Nelson. Couple of quick things.

One, you've been in the academic world and in that world you grade people on their performance. You get an A+. You couldn't have done better here today and I just wanted to say that. Second, in terms of climate change I think it's very important for the administration to understand what I'm hearing.

You know, I -- I reported yesterday some of what I have been hearing and I know it discomforts some in the administration to hear that the budget as is, in my judgment, just as it's been written probably can't pass here. Now, I say that because I have colleagues coming to me every day saying to me, "If this is in don't count on my vote." One of the things that a group of colleagues has come to me about is with respect to the auctions and a concern that they're insufficient resources to offset effects on consumers and companies that are very adversely affected, and I know we had -- yesterday the head of the Office of Management and Budget told us that he's got grave concerns about using -- to having some allocations.

I just say to you in terms of getting something passed here, not an academic exercise but a real world practical politics exercise -- in terms of getting something passed there's going to have to be flexibility on how the funds are used. The notion that very adversely affected companies are not going to be given any help I don't think -- I'm just making a -- this is not my position, just my observation based on colleagues coming to me. And so it's very, very important that we have flexibility and that we work together to try to resolve things to get a result because it would be an utterly empty exercise around here not to get the votes to actually pass things and pass things that will make a difference for our country.

On the point that Senator Nelson made with respect to the Gulf, and he's got -- quite properly he is defending his state as he sees in the best interest to defend his state. Others of us have a somewhat different view. You know, the way leasing works in the oil industry is you go out and lease vast tracks with no intention ever of drilling on all of it. That isn't the way it works.

First of all, you go out and lease vast tracks and then you do exploration to determine what -- where are the best prospects and, you know, parts of the Gulf have been very picked over. The western Gulf has been very picked over. The eastern gulf has not. And with respect to the military's restriction, they've made clear to us in the group of 10 -- the Gang of 10 that became a group of 20 and by the way, Secretary Salazar, when he was a senator was part of our group -- the military has made very clear to us they're open to working with us and technology has changed, and you can have a much reduced footprint than was previously the case and therefore much less impact on military operations.

So I think all of this has to be kept in mind. Again, anybody that suggests drilling offshore is the silver bullet answer that's -- that's just not serious and I think virtually everyone up here knows that. But it's part of the mix. It's part of the mix, and there are other things that will be much more significant contributors.

You've made clear the list here. Conservation and energy efficiency has got to be at the top of the list. Anybody that's studied this for five minutes knows that what you said here today is true and so let's be aggressive about doing those things and I'm sure you will be. With that, are there any final comment that you wanted to make we'd be happy to hear it.

SEC. CHU: Well, I thank you for your comments and -- and especially the last ones. One final comment -- I forgot to say that I consider energy efficiency to be terribly sexy. (Laughter.)

SEN. GREGG: Okay. Well, you know --

SEC. CHU: But, you know, it's all in the eye of the beholder.

SEN. GREGG: Yes, sir. Look, these things are so very important for our country's future. We are blessed to have somebody of your capability and your character in this position of responsibility, and again, this was almost -- if they were putting on a seminar how to present yourself before a committee of Congress, your performance here today would be a pretty good place to start. Thank you every much. The committee stands adjourned.

END.


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