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Hearing of the Energy and Water Development Subcommittee of the House Appropriations Committee - The Department of Energy's FY 2010 Budget Request


Hearing of the Energy and Water Development Subcommittee of the House Appropriations Committee - The Department of Energy's FY 2010 Budget Request

Chaired by: Rep. Ed Pastor

Witness: Steven Chu, Secretary, Department of Energy

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REP. PASTOR: Before we have the meeting called to order, I think, my colleagues, you deserve at least some explanation, so I'll try to give you the latest and what I've been told so that we -- I understand that I've now been given the title of vice chair. And so Chairman Visclosky will continue as the chair of the subcommittee, but due to the circumstances he has decided that the 2010 bill will be our responsibility.

And so with your cooperation, your support, your assistance, our objective is to do the 2010 bill, bring it to the subcommittee, bring it to the full committee, on to the floor and send it to the Senate. So the circumstances and the objective is to do that, so I look forward to working with all of you and gaining your support and confidence. But Pete continues to be our chairman.

So I know you guys probably have different names you want to call me, but -- (laughs) -- either Congressman Pastor or vice chair would be -- no, no, Mr. Chair, I think is inappropriate because Pete is still the chair, but since I've been given the title vice chair, that'll be fine. Or I'm sure Mike has other terms he probably would like to refer to me -- (laughs) -- but we'll keep it in good order. (Laughter.)

REP. CHET EDWARDS (D-TX): Mr. Chairman, when you're through with those comments, may I just make a very brief statement?

REP. PASTOR: Sure.

REP. EDWARDS: I just want to say I think it reflects well on Chairman Visclosky that he cares so deeply about the important programs funded under this bill that he didn't want any press attention focused on him to be a distraction from this subcommittee's work. There's been no legal action taken against him. There's been no indictment. No trial.

But I think he certainly has my respect for saying the work of this subcommittee, which has a tradition of working so well on a bipartisan basis, must go on. And I think it's a reflection of his commitment to this committee. So I salute him for putting this committee's work above any personal interest he might have had in continuing on acting as chair through this markup.

And I salute you, Mr. Vice Chair, for taking in your other -- you do have the gavel, so it's still hard not to call you chair. (Laughter.) But I thank you. I know you're going to do an excellent job. And we all on both sides of the aisle I know look forward to working with you and this great staff on a bipartisan basis to do the work of this subcommittee. Thank you.

REP. PASTOR: Good. (Sounds gavel.) Hearing will come to order. Good morning. We have before us today the secretary of Energy, Dr. Steven Chu. He is here to present the administration's budget request for the Department of Energy. I am pleased that President Obama has clearly engaged the energy challenges facing this nation and has made energy policy a top priority of his agenda.

I view the president's decision to ask Secretary Chu to lead the Department of Energy also as a reflection of his commitment. Unfortunately, too often secretary positions have been a consolation prize for appointees who preferred other positions. But we are very encouraged that we have before us today a Cabinet secretary who is truly enthusiastic about embracing the DOE portfolio of this era of energy challenges.

The secretary of Energy features a broad portfolio of research and development efforts. Given the substantial short, medium and long-range energy challenges facing the nation, we need a strong but balanced approach to energy R&D which includes both fundamental energy research and development, as well as significant technology demonstration, deployment and commercialization efforts.

Mr. Secretary, we look forward to hearing from you today of how the fiscal year 2010 budget request will help address the energy and national security challenges we face and the management plans to ensure efficient planning and execution. We look forward to cooperating with you on the challenges ahead of us.

But I do want to remind you that the cooperation and respect are two-way streets. While we admire your background and expertise, that in no way means that we will rubber stamp the DOE budget request for fiscal year 2010.

There is also relevant background knowledge and experience and expertise on this committee. I don't expect that we will always agree on everything regarding the DOE budget. But I sincerely hope that we can work together through those differences in a cooperative and a bipartisan manner.

Mr. Secretary, I would also ask that you ensure that the hearing record, responses to the questions for the record and any supporting information requested by the subcommittee are cleared through the department, your office, the Office of Management and Budget, and delivered in final form to this subcommittee no later than four weeks from the time you receive them.

With those opening remarks I would like to yield to our ranking member, Mr. Frelinghuysen.

REP. RODNEY FRELINGHUYSEN (R-NJ): Thank you, Mr. Vice Chairman. Let me associate myself with your remarks, as well as Mr. Edwards'. And I look forward to working with you.

Secretary Chu, good morning. Welcome to your first appearance before this committee. You bring to this administration a history of impressive accomplishment. And may I add a New Jersey connection through your previous employment with AT&T Bell Labs. How good it was in those old days.

I should say, and to your credit, that I'm sensing an undercurrent of enthusiasm about the new leadership of the Department of Energy. I hope that you can capitalize this and it'll lead to more focused and more accountable management across your department. Your portfolio is daunting with roughly 14,000 full-time employees overseeing 93,000 contractors, not to mention the number of employees at the federal and state level needed to meet the requirements of the Recovery Act, aka stimulus, legislation which, I may add, our subcommittee never reviewed and which more than doubled the size of your budget to -- with an infusion of about $38.7 billion.

It'll come to no surprise that there are clear philosophical differences emerging between the developing priorities of this administration and those long supported in a bipartisan way -- I may add -- by this committee and Congress.

Let me outline a few.

Basic and applied research is indeed the core of our nation's ability to remain innovative and cutting edge. But we must maintain our focus on technology development and ultimately the commercialization of revolutionary technologies to keep our nation safe and competitive. Unfortunately, this budget appears to subordinate commercial efforts and recasts our partnerships with private industry in disturbing ways.

Last year the volatility of gas prices jolted our country into an energy awakening leaving the American public thirsting for cheaper domestically generated and environmentally clean energy supplies. I believe to get there we must have diversity of energy supplies, period, and that nuclear power must be part of that mix. Nuclear power has wide acceptance these days among most of our fellow citizens, yet this budget makes me question whether nuclear power is a priority in this administration.

Your request underfunds the department's commitment to the nuclear industry, including the NP2010 program. It appears to back off our commitment to our international partners by stalling the development of the next-generation nuclear power plant. Both of these were at one time good-news stories for the department, Mr. Secretary.

This budget neglects our commitments to a tested and proven private industry and, to my mind, to our international partners and allies and puts our nation at risk of ultimately ceding our leadership role in the clean energy revolution, a role that I personally strongly support.

I'll be frank with you, Mr. Secretary, the only point of real clarity and deliberate resolve I can glean from this request is the proposal to shutter Yucca Mountain, a decision that to this member is an irresponsible about-face with no clear way forward. You propose $5 million for a blue ribbon panel whose charter would include a review of alternative locations for a geological repository and, I may add, covering old and familiar investigative territory.

There is a sad and very costly irony with this proposal. Taxpayers have spent over $10 billion, and countless scientific studies have been conducted over 26 years. The question of what we do with our nuclear waste had been answered, quite honestly, until this budget was submitted.

The termination of Yucca Mountain appears to have had some confluence with a larger energy supply portfolio as well. Quite frankly, the budget reads more like an attempt to pit -- and it's unfortunate -- renewable and nuclear power against each other, a false choice in my book. No one can dispute the potential benefit and growing need for renewable energy sources. Indeed, renewable sources will become a larger contributor, though they currently account for just 7 percent of the overall energy mix.

As I have already mentioned, there is, I believe, a growing public consensus that nuclear power must be a major component of energy -- of any energy portfolio that reduces our environmental footprint.

Economically, the nuclear power boom will continue across the globe with or without the United States. China, for example, has 125 nuclear plants in the pipeline. The United States has just 26 in the licensing process. Nuclear and renewable energy should be partners in the push for environmentally clean power and economic development, not combatants or rivals. Unfortunately, your budget -- your department's budget does not seem to support that approach. And I quite honestly feel there is a similar bias in this budget against oil and natural gas production.

Finally, the weapons activities request a mere $4 million above last year's level, significantly below the rate of inflation. I do not see how the president's vision -- I agree with his vision -- of a world without nuclear weapons, not to mention NNSA's nuclear obligation to our nation's security, can be met with this request.

While the budget requests an increase for dismantlement, it cuts or flat-lines funding for scientific and industrial expertise that we'll need in the long run. Meanwhile, the Russians and Chinese are continuing their aggressive nuclear development programs and the North Koreans have demonstrated a degree of sophistication that should worry all of us.

As I told your administrator two weeks ago, national security does not deserve a placeholder budget, yet this is precisely what we have before us to my mind.

Mr. Secretary, as I close, I want you to know that we know how this budget was drafted. The needs of your department are much greater than ceiling that OMB has forced on you. Action now rests with this committee. We will be rational and prudent and nonpartisan in our recommendations so as not to compromise any element of national security.

So I look forward, as I'm sure all members of the committee do, to your remarks and to our discussion during this hearing.

Again, thank you, Mr. Vice Chairman.

REP. PASTOR: Thank you, Rodney.

I want to inform the subcommittee and the secretary that we plan to call the hearing at 12:00. And so we'll have as many questions as possible, but I think that at 12:00 we'll adjourn.

Mr. Secretary, good morning, welcome. It's a great pleasure to have you with us.

SEC. CHU: Thank you. Thank you, Vice Chair Pastor, Ranking Member Frelinghuysen, members of the committee.

I'm pleased to be before you today to present President Obama's fiscal year 2010 budget request for the Department of Energy.

Before I start I'd like to say, yes, I did not prefer any other position, and I am looking forward -- (laughs) -- I am looking forward to working with all of you. And we will be responsive to all the requests.

So the president's 2010 budget seeks to usher in a new era of responsibility, an era in which we invest to create new jobs and lift our economy out of recession while laying a new foundation for our long-term growth and prosperity.

President Obama's FY 2010 budget invests in clean and renewable sources of energy so we can reduce our dependence on oil, address the threat of a changing climate and become the world leader in new, clean energy economies.

The FY '10 budget request for the Department of Energy is ($)26.4 billion -- essentially flat, compared to FY 2009 -- and it complements the significant energy investments in the American Recovery and Reinvestment Act.

The budget request emphasizes science, discovery and innovation to support the key missions of the department.

My written testimony includes extensive breakdown of this budget. And I'd like to use this time to briefly highlight a few of the top- line numbers and areas of particular importance.

To promote nuclear security in the president's ambitious nonproliferation goals, the budget requests ($)9.9 billion for the National Nuclear Security Administration.

To continue to accelerate legacy cleanup of our nation's nuclear weapons production, the budget requests ($)5.8 billion for the Office of Environmental Management.

To bolster the department's commitment to scientific discovery, the budget requests ($)4.9 billion for the Office of Science.

And to foster a revolution in energy supply and demand, while positioning the United States to lead on global climate change policy, the budget includes requests for a range of energy investments, including ($)882 million for the Office of Fossil Energy, ($)845 million for the Office of Nuclear Energy and ($)2.3 billion for the Office of Energy Efficiency and Renewable Energy.

That clean energy funding includes several notable strategic investments, even as this budget holds the line on spending overall. Solar power will receive ($)320 million, an increase of 82 percent. Wind energy is funded at ($)75 million, an increase of 36 percent.

Funding for clean vehicle programs is up 22 percent to ($)333 million. And funding for building technologies is increased by 69 percent to ($)238 million.

Another significant increase is the Office of Electricity Delivery and Energy Reliability, which will receive ($)208 million, 52 percent more than FY 2009, as it works to develop a new smart grid.

This request also includes funding to implement the loan guarantee program and Advanced Technology Vehicles Manufacturing Loan Program.

With that brief overview, I want to turn to one of my highest priorities in the budget, and as secretary -- amplifying the Office of Science's fundamental research with innovative approaches to solving the nation's energy problems.

Specifically, this budget request includes three initiatives designed to cover the spectrum of a basic to applied science to maximize our chances of energy breakthroughs.

The FY 2010 budget will launch eight Energy Innovation Hubs, which are the -- while the Energy Frontier Research Centers and ARPA-E were launched last month.

Let me explain briefly the differences among these initiatives and why I believe launching these hubs is so important.

The EFRCs are small-scale collaborations, predominantly at universities, that focus on overcoming known hurdles in basic science that block energy breakthroughs, not on developing energy technologies themselves.

ARPA-E is a highly entrepreneurial funding model that explores potentially revolutionary technologies that are too risky for industry to fund.

The proposed energy innovation hubs will take a very different approach. They will be multidisciplinary, highly collaborative teams, ideally working under one roof to solve priority technology challenges, such as artificial photosynthesis, the creation of fuels from sunlight.

A few years ago I changed the course of my scientific work to focus on solving our energy and climate challenges, because of the urgency of these issues and because I remain optimistic that science can offer better solutions than we can imagine today. But those solutions will only come if we harness the creativity and ingenuity and intellectual horsepower of our best scientists in the right way.

I'm convinced that launching energy innovation hubs is a critical next step in this effort. Bringing together the best scientists from different disciplines in collaborative efforts is our best hope of achieving priority goals, such as making solar energy cost-competitive with fossil fuels, or developing new building designs that dramatically use less energy, or developing an economical battery that will take your car 300 miles without recharging.

These are the breakthroughs we need. And the energy innovation hubs will help us achieve them. I saw the power of truly collaborative science like this firsthand during my nine years at Bell Laboratories.

I believe that to solve the energy problem, the Department of Energy must strive to be the modern version of Bell Labs in energy research. And that's what these hubs will do. They will essentially be little Bell "lablets."

These investments will pay for themselves many times over and enhance America's competitiveness on green energy jobs of tomorrow.

A final initiative in the FY 2010 budget is a comprehensive K through 20-plus science and engineering effort called Re-energize, funded at ($)115 million. Through Re-energize, the department will partner with the National Science Foundation to educate thousands of students at all levels in the fields that contribute to our fundamental understanding of energy science and engineering systems.

It is my firm belief that the short-term impact of the Recovery Act, combined with the long-term vision in President Obama's FY 2010 budget, will lay the necessary groundwork for a clean economy.

Both President Obama and I look forward to working with the 1100th Congress (sic) to make this vision a reality.

I appreciate this opportunity to be here before you. I ask that my full written statement be included for the record and will be happy to take questions at this time.

REP. PASTOR: Without objection, your statement will be in the record.

Could you -- you finished talking about the hubs by saying "mini- Bell Labs." At that time it was basically a private commercial venture, as I understand the Bell Labs. In your vision of the hubs, is it a private-only venture? Is it a public-private venture? Could you expand a little bit more on how you see a hub looking like?

I have a great interest in battery development. We've kind of lost that technology here. It's Korea and Japan and other countries, I think, are at the forefront. And as we -- there's a great need for developing greater storage capacity and being able to use it whenever we need it.

And so that's one of my interests is how we -- so battery development -- research and development is something I think is very important.

How would you deal -- or how would you create and how would you develop a hub that was in that particular area? How would you -- how do you visualize it?

SEC. CHU: Okay, thank you for that question, Vice Chair.

The idea of a hub or a Bell lablet was not whether it was private or public but the way Bell Laboratories actually managed the science.

When I was at Bell Laboratories for nine years -- and actually for about 75 years -- the very best scientists were the managers. That's somewhat unusual, because in many instances you might have been a good scientist at one time, seen better days and then you become a manager. That was not true at Bell Laboratories. And so the technical decisions of how things were made, how you were going to invest your money, were made by these contributing scientists.

Now, what that did is it allowed people to make very clear, very timely decisions. It wasn't -- decisions on what to fund were not made by peer review, they were made by very intelligent people -- and back and forth between the people proposing and the people who had to bless the projects.

And I (really mean it would be in an ?) intimate sort of way. When I was a department head a person would come to me and they would say, I've got a great idea, here it is. So let's go to the board, we'd talk about it.

I would say, well, what about this, what about that? I don't think it's going to work because of this. And they answer back and forth.

That is a process which allows you to go very much more quickly. When I read the history of the way Lincoln Labs was designed during World War II, the way Los Alamos, the way the metallurgical labs were done on the Manhattan Project, it was a similar thing. The very best scientists were actually in the fray discussing back and forth.

And so what we want to do -- oh, the other thing is that in these innovation hubs, they can span many different areas. For example, in batteries, it's a materials issue. There's measurement issues. There are structural issues. There are many things that can cut across many disciplines.

And so what you -- and there could be some basic science issues. But in the end you want to deliver the goods. In the end Lincoln Labs had to deliver radar. So it spans this gamut in a seamless way.

And then you have these top leaders making these decisions. If we did it the old fashioned way, which is you make -- give us a proposal. We decide whether it's good. You go away for three years.

You come back and tell us what you've done and we'll think about giving you another three years' worth of money. That actually delays things quite a bit. You can't abandon things very quickly. The management say, here is a much better idea. Now we know enough in the first three months. This doesn't look like it's going to pan out. You can drop it. You can't drop it if you've got a proposal. You've got to show some results, because golden rule number two of any scientist is "get refunded."

So if you can get an on-the-ground, intimate top managers looking over what's going on I think you can go much faster. That's the basic idea.

REP. PASTOR: Thank you, Mr. Vice Chairman.

REP. FRELINGHUYSEN: Secretary, The New York Times reported, as you may have seen on the front page this morning, what would be, I think, regarded as a rather important security lapse. Could you tell us a little bit about what you've been able to find out? Obviously there's -- some of that basic information's out there. But certainly, there appears to be, I guess, in 266 pages quite a lot of information that might be considered to be sensitive.

Can you tell us and maybe give us a level of assurance or reassurance as to what's going to happen or --

SEC. CHU: Okay. Well, I know what I know from reading that New York Times article. So let me start with that.

My understanding is that there was -- someone made a mistake, probably at the Government Printing Office, and released sensitive information. That information includes where nuclear spent fuel is and civilian sites. But as far as the Department of Energy is concerned, it also includes some information on where some high-level uranium, for example, is in our sites, in particular in Oak Ridge and Y-12.

And where on the sites -- identified, actually, some tunnels, is my understanding -- from where this material is kept. And so that is of great concern.

We will be looking hard and making sure that physical security of those lab sites is sufficient to prevent people, terrorists, others from getting hold of that material.

That's all I can say at the moment. But it is of some concern, especially in Oak Ridge and Y-12.

REP. FRELINGHUYSEN: You're dealing with it. And that is reassuring.

SEC. CHU: Well, I'm here with you, but as soon as I go back I'll deal with it. (Laughs.)

REP. FRELINGHUYSEN: That's why you're leaving at noon.

When we passed the stimulus bill, aka the Recovery Act -- and I mentioned in my opening remarks the Department of Energy was a huge beneficiary of a lot of money. And of course, I have some concerns that a lot of that money was borrowed and has to be paid back.

Can you tell us -- and maybe you weren't there during this creative period -- where those dollars -- how you formulated the decision to spend those dollars, to what extent money has gone out the door, in other words, how much of it has been obligated and who you have in a position of responsibility to make sure as that close to $39 billion goes out the door -- whether you're going to have -- what person's in charge of oversight and accountability.

SEC. CHU: So our goal is by Labor Day to have obligated roughly 50 percent of the $38.7 billion. If you look at the various things -- I'm thinking, for example, in weatherization -- there is a concern all throughout the whole program that we want to make sure the money is spent well. And so the weatherization, for example -- ($)5 billion in the Department of Energy -- is split in defined ways. Already, all the states have 10 percent of that money to stand up the organizations to make sure that, as the states and the local areas begin to weatherize that there is a trained corps of people that can do this in a proper way.

After that, then, we will release another 40 percent and see how they're doing. So we won't get the remaining money, we'll give 40 percent and say, okay, let's see what you've done. Is this money being well spent? It's one thing to stimulate jobs, but overall, we've got to not only stimulate jobs, it has to actually save energy.

Because it's the saving of the energy that will actually put money back in their pockets that will begin to stimulate the economy in a second way. So it's very important that you actually save on the energy bills.

So it's going to be released in tranches.

On the energy loan parts, the loan guarantee parts, we have announced one loan so far. It -- from when I took over the department, it was -- it took us about 58 days. That's a little bit ahead of the schedule I was originally told, which was a year and a half.

We are hopeful in the next several weeks we will be announcing another set of loans. Always there are little glitches and things. There's negotiations between companies, things of that nature.

These are announcements of conditional loans in the sense that we will obligate -- if they -- if those companies do their part in getting the additional 20 percent to financing, it's good.

So just so I'm making clear. There are a number of other things -- in fact, at the very beginning of, I think, the first week of my time at the Department of Energy, I appointed a person who reports directly to me that oversees all of the economic stimulus material. And he has meetings now, I believe, on a daily basis with all the various people. And we chat --

REP. FRELINGHUYSEN: You and I have chatted about that.

SEC. CHU: Right.

REP. FRELINGHUYSEN: You're going to make sure that that person is, you know, cracking the whip in terms of oversight as money goes out the door for weatherization and to the various states.

SEC. CHU: We talked probably almost every day. When I'm in town we talk and then otherwise it's e-mails. And that person -- although he's a very kind person, he does crack the whip. (Laughs.) So, yes.

REP. FRELINGHUYSEN: The money's going to weatherization assistance, which is, you know, a huge boost from, what, ($)220 million last year to over ($)5 billion. You're confident that through the mechanisms that you've set up that the states are prepared to hire people that are competent to make sure this money gets out the door?

SEC. CHU: Well, let's just say -- I don't know about confident. Let's just say I -- we are trying to do a lot of preventive things as much as possible to make sure that it is going out the door in a sensible way that you try to minimize fraud.

So this is an area -- I'll confess, this is an area of some vulnerability and because it is and because we know it, we're looking as closely as we can at what the states' programs are doing.

REP. FRELINGHUYSEN: In many cases the programs that exist in some of our states, and individual legislators can put their oar in the water here, the amount of money they're getting is a huge amount compared to whatever they've traditionally gotten from the Department of Energy, so there's a potential there for trouble if we don't set the pretty high standards to --

SEC. CHU: No, I agree with you absolutely. Even in -- you mentioned also the stimulus money, the ($)38.7 billion. Our budget's ($)26 billion a year and the 38 -- and most of that will be obligated. It will essentially be obligated in two years. Even that -- and the strains on our department are such that we can't do things as business as usual.

As an example, we are now scouring the country looking at the best universities. Letters are being sent out to presidents, to deans, to the heads of professional societies -- give us some of your best people to help us review these projects. We cannot rely only on the staff of the Department of Energy. And then we will be bringing them in for a week in Washington this summer to get the very best experts to help us review.

REP. FRELINGHUYSEN: You're going to bring them into Washington?

SEC. CHU: In the summer.

REP. FRELINGHUYSEN: To be --

SEC. CHU: In the hot, (sweltering ?) summer. (Laughs.)

REP. FRELINGHUYSEN: -- inculcated in how to get --

SEC. CHU: This is true government service.

REP. FRELINGHUYSEN: Oh, it's unbelievable. We know you're the grantsman-in-chief now. You've got a huge portfolio and we wish you luck in that regard. We'll be, obviously, closely monitoring what you're doing.

Thank you, Mr. Vice Chairman.

REP. PASTOR: You may want them to go to Phoenix in August, since that'll show real dedication. (Laughter.) And there's great rates so.

Chet?

REP. EDWARDS: Thank you, Mr. Vice Chairman.

Secretary Chu, congratulations on your appointment and thank you for your leadership in the energy field for many years. We look forward to working with you.

I salute the administration for saying we need a balanced, multipronged approach toward changing our dependency upon foreign energy sources. "Drill, baby, drill" -- it's a good slogan, but I think we all understand it requires more than that. It's going to be conservation, alternative energy research and reliable dependence upon some traditional sources of energy.

And I want to ask you about that particular point. Nuclear power provides, am I correct, about 20 percent of our present electricity needs in the United States? Is that approximately correct?

SEC. CHU: That's approximately correct.

REP. EDWARDS: Right. So with our population and economy growing, we'll have to have new nuclear power plants just to maintain 20 percent of our electricity coming from nuclear plants. Is that correct?

SEC. CHU: That's correct.

REP. EDWARDS: What is the administration's position on the role nuclear power should play in providing energy for our homes and businesses?

SEC. CHU: I would actually like to see that fraction increase.

REP. EDWARDS: Okay. Will our policies in the administration encourage that?

SEC. CHU: Yes, and some actions in Congress. I think nuclear power does provide base load energy. It's clean. As we restart the nuclear industry I would like the United States to recapture the technological lead.

There's some good news. Westinghouse, which, even though it's partly owned by the Japanese, the designers of the AP1000 are in the United States and it is getting a lot of contracts worldwide.

REP. EDWARDS: Okay. Let me ask you about another source of energy. In your bio it says you're charged with helping to implement President Obama's ambitious agenda to invest in alternative and renewable energy, end our addiction to foreign oil, address global climate change and create millions of new jobs.

Let me talk about the ending our addiction to foreign oil. Presently, as I understand it, natural gas and oil provide 65 percent of America's energy, and independent natural gas and oil producers develop 90 percent of U.S. wells, produce 82 percent of U.S. natural gas and produce 68 percent of U.S. oil.

I know you aren't secretary of the Treasury and you're not overseeing tax policy, but you are a key voice, if not the key voice, in the administration on energy issues. Can you explain to me how the administration thinks it will reduce our dependence on foreign oil or even natural gas and how it will not discourage drilling of natural gas wells in the country if we were to add billions of tax dollars for intangible drilling costs, percentage depletion issues and other tax issues that were included in the president's budget?

Seems to me counterproductive, particularly with the natural gas since that price is set on a regional and national basis based on supply and demand, not on a world basis, to propose taxes that would discourage independent gas producers that generally take every dollar in profit they make and put back into production here in the U.S. It seems awfully counterproductive for encouraging less dependence upon foreign sources of energy to be adding a massive new tax on to independent producers of natural gas as well as independent producers of oil in the United States.

Any thoughts on that as secretary of Energy?

SEC. CHU: Yes, actually, I would go with the first sentence you just -- when you started that, which is that's a question for the secretary of the Treasury, but let me add to what things are under my control.

As I've said before with Ranking Member Frelinghuysen, the best way we can end our dependence on foreign oil are two things. Aside from -- part of that comprehensive plan would be increasing the domestic supplies, but the other part is conservation, that we use especially less in our personal vehicles and a diversity of supply.

And so a diversity of supply means to me several things. It means that we develop as quickly as possible fourth-generation biofuels based on cellulose -- (inaudible) -- cellulose that make environmental sense, that would be cost-competitive with natural oil.

The appealing part about that is that it uses a lot of agricultural waste that is now put into landfill or we simply burn up and pollutes the air. So this is wheat, straw, corn stover is plowed into the ground, but we can extract half of it. (What rice straw ?) we produce lumber waste materials, urban waste.

So that's one thing. The other thing is electrification of personal vehicles. If we get that we can off-load a lot of our gasoline supplies with plug-in hybrids. And so we want to develop as aggressively as possible those things.

REP. EDWARDS: I salute the administration for those efforts and I'll finish by saying I respect the fact that you aren't secretary of the Treasury, you're not director of OMB, but you are secretary of Energy and I'd like someone in the administration to explain to me how it encourages natural gas production in the United States, a clean fuel, relatively clean fuel, and by taxing it to the tune of billions of dollars of additional taxes.

And I hope your voice will be heard -- hope the secretary of the Treasury doesn't come up with tax policies without input from the secretary of Energy when it comes to his tax proposals impacting energy production and supply in this country.

Thank you.

REP. PASTOR: Zach?

REP. ZACH WAMP (R-TN): Thank you, Mr. Vice Chairman.

Mr. Secretary, I, too, applaud you for your intellect, for your willingness to serve. I encourage you greatly on renewables and energy conservation, having helped lead those efforts through the years here.

Nuclear, though -- big question in both nuclear energy and nuclear weapons. That's kind of my two-pronged approach here this morning.

Talk to me, please, about the commitment to closing the fuel cycle since we're moving away from Yucca, what we're doing in your budget request to advance the research to demonstrate that that can be done, which we believe at the Oak Ridge National Laboratory can be done pretty quickly. I think that's got great potential.

And then you talk about your desire to increase the 20 percent. Where's the loan guarantee commitment, both in bills we've already seen and the upcoming bill to show that the administration wants to see more than a handful of reactors built in order to increase that 20 percent electricity from nuclear?

SEC. CHU: So let me take them in reverse order. The loan guarantee, there are discussions ongoing, active discussions with five of the applicants -- four of the applicants. We have $18.5 billion. We're proceeding as fast as possible. Hopefully sometime this summer we can make announcements. That 18.5 billion can cover three or four and no more. There are other applicants and so in order to proceed ahead with more we would essentially need more money for -- you know, authorize and appropriate for --

REP. WAMP: And you'll be pursuing that in future years --

SEC. CHU: Yes.

REP. WAMP: -- future bills, future options?

SEC. CHU: Yes, I think that makes sense. There are a few other things we're doing. This is the final year, it was mentioned before, MP2010. There were two reactors in MP2010, the AP1000 and a new GE reactor. We are going to be completing the -- helping Westinghouse finalize, and hopefully it's an NRC decision, but we will be hoping that NRC will be looking favorably on the -- (inaudible) -- license that reactor in the U.S.

The GE reactor is a slightly different matter. GE has temporarily put it on hold. A lot of orders for that reactor have been shifted, and so while it's in this state, we didn't think it was prudent to be going ahead because GE has temporarily put it on hold. So we're on hold on that one. If they want to go forward we will try to help them.

In terms of closing the fuel cycle, that's something which I personally thing has great opportunity. If nuclear energy is going to be a viable form of carbon-free energy not only this century but next century, we have to look towards recycling the fuel.

We have to be looking towards developing a new generation of reactors, in particular a generation of reactors that have a high- energy neutron flux that can burn down the actinide, long-lived actinide components -- that we could actually harness much more of the energy in nuclear fuel. We're using less than 10 percent today and that's it.

And so I think that the possibility is very real.

Now, having said that, I would have to say that the current technology that's being used today, for example, in France and in Japan, creates a stream of plutonium and that is not good. So plutonium or plutonium oxide, gotten into the wrong hands, could be bomb material.

So what we want to do -- so there are two prongs -- three prongs. We want to spend research in developing a proliferation-resistant method of recycling the fuel. And if we get that method and it looks economically viable, then it's time to pilot, not before. So that's one thing.

We are looking at -- so we're going to be researching proliferation-resistant types of ways of recycle fuel. It's been said before, we're investing in advance reactors and advance reactor designs that go beyond things like the Westinghouse reactor. And so that's something that we feel very positive about.

Now, the good news is for the next couple of decades we have enough reactor fuel and so we need not rush in to start in to pilot something prematurely. There was a National Academy of Science report on this issue, in fact the whole GNEP issue. It came out very positively on everything except piloting a fuel recycling plant at this time. Certainly the international cooperation in trying to make sure that these -- the resurgence of nuclear power in the world, civilian nuclear power, is done correctly in the international collaboration -- all these things came out very positively, but that one thing, they said wait, let's do some more work on it.

REP. WAMP: Well, let's remember that the first hundred reactors were built in 20 years in this country and we know a whole lot more about it now than we did then and we can build another hundred reactors in the next 20 years, as Senator Alexander said last week, a whole lot easier than we built the first hundred reactors.

And never been an accident -- I mean never been a death associated with nuclear energy in this country, so I think time is of the essence. I hope that the research that you're talking about doesn't slow the process of bringing new electricity online if we're going to be competitive. The renewable frontier is great, but we're not where we need to be right now and we all know that, so just want to encourage you to push.

Second thing, on this New York Times story, the DBT -- the design basis threat -- moves since September 11th. Now, NNSA is part of DOE but it's separate, and I frankly think it's worked pretty well so you're going to have to, maybe following this story, I hope, move a little bit into that national security piece of your responsibility to get to the bottom of this.

I hope you'll come to Oak Ridge. I hope you'll go to 9212, which is a building there at Y12 that you won't like. You'll say this is not adequate. It would be replaced by the uranium processing facility which is on the drawing board, so to speak, but the budget request is not sufficient to maintain the level of talent that we have designing the UPF.

But this may cause you to take a harder look at this, even this story. I'm always looking for the sliver lining. The DBT, the design basis threat, could very well be modified as a result of this story on what kind of security precautions you need to protect our stockpile of highly enriched uranium.

So I would encourage you to come take a second look. I understand that the administration is underfunded. The UPF design, we've made a pretty strong case at this committee, it needs to be funded. Fifteen members show up today, though. It speaks volumes about their interest in what you're doing and the energy piece of this.

And I know that you definitely have got a signature issue on the energy side, but the weapons side here is going to need your attention, obviously from this story and more.

And then finally, on pensions: I read where you are looking at trying to supplement some of the loss of pension revenue I think for the people that work for the Department of Energy. And I want to ask on behalf of the whole slew of retirees that are out there that haven't had any update in their pension benefits in a long, long time, will you consider looking at that while you're looking at the pension funds of existing workers?

SEC. CHU: Yes. I think it's actually part and parcel of the whole package. It's the current workers and the former workers with regard to the pension exposures when the market crashed.

REP. WAMP: Thank you, Mr. Chairman.

REP. PASTOR: (Off mike.)

REP. MARION BERRY (D-AK): Thank you for being here this morning, Mr. Chairman.

And thank you for being willing to take on this job. Looking at your resume, you enjoy challenges. You sure got you one now. (Laughter.)

Where I grew up they had a saying, don't feed the bulldog. And we're trying to figure out what to feed the bulldog here, because if we don't have the energy to grow this economy, regardless of what form it takes, it won't make any difference, we can't grow it. You know that. You don't need me to tell you about it. But I'm -- we're all very concerned about it.

I have one question.

Of the energy innovation hubs, have they already been selected?

SEC. CHU: No.

REP. BERRY: How will that be done?

SEC. CHU: Well, we'll be putting out a call for proposals. There are topics that have been announced and we would then review those with both -- I hope to assemble, again, going back to what I said before, some of the very best people that we have to look at those proposals. A critical part of that would be the leadership of those hubs, because this is a critical part of that. I don't just want people to cluster together in some virtual thing. It has to be a really coherent thing, ideally under one roof.

REP. BERRY: I believe it was in '07, but we established, the Department of Energy designated three centers of research for biomass: one at Oak Ridge, one at the University of Wisconsin and one at the University of California at Berkeley. Can you tell me anything, or would you -- might want to take it for the record -- what's happened to that?

SEC. CHU: That is actually a precursor to these other innovation hubs. Those three effectively hubs have done very well. There are many, many patents that have come out of all of those. They are largely highly coordinated research efforts that do go across the gamut between the -- solving some basic research needs but really focus on delivering some goods, of actually developing technologies that will be picked up by the private sector.

So in fact, those biology energy -- those energy biology centers were the precursor for the expanding into other areas for the hubs.

REP. BERRY: Okay. And that is focused on biomass?

SEC. CHU: Those three are focused on bioenergy, biomass, that's correct.

REP. BERRY: Okay. I would share some of the concern that's been mentioned. I know you got, I guess it's $18.5 billion in the load guarantee program at present that you've already said; I think you intend to ask for more if it's needed. It seems to me that that's just not big enough to do the job that we need to be moving forward pretty quickly on and I would -- I'd hope that you all would look at that carefully.

I suffer from concern -- I live way out in the country and I don't want to wake up some night and not be able to turn the lights on and we'll be the first one's cut off when we don't have enough and --

MR. : (Off mike.) (Laughter.)

REP. BERRY: There are those that don't think that would be a bad deal, but -- (laughter) -- but I think it's something -- and I would also share with you my concern that we're going to go back and reinvent the wheel with Yucca Mountain. We've got a mighty expensive dinosaur out there if we don't figure it out. I share your interest in salvaging this used fuel and making it so we can use it again, but it seems an awful shame to me to have spent that much money and then we still haven't got anything and we're kind of going back and starting over.

So I know the folks in Nevada don't like it, but sometimes things happen in Arkansas I don't like either, but thank you.

Every time -- one of you guys appears before this committee it's well established that I'm not a nuclear physicist -- (laughter) -- and my colleagues enjoy that fact a great deal, so thank you for being here, Mr. Secretary.

SEC. CHU: You're welcome.

REP. PASTOR: Mike?

REP. MICHAEL K. SIMPSON (R-ID): Thank you, Mr. Vice Chairman. I was just thrilled to learn that Mr. Berry's district has electricity now. (Laughter.)

Thank you, Mr. Secretary, for being here today and -- I knew I shouldn't have said that. (Laughs.) Thank you for being here today and congratulations on your appointment. We look forward to working with you at these challenging times in the future.

I have a whole page, you know, pages of things that I'd like to go through, but let me talk first about something: Yucca Mountain. I'm not going to criticize your decision on that. It is what it is and I've learned in politics it doesn't do a lot of good to howl at the moon very long, but let's talk about where we're going forward on that. You said when -- apparently that Yucca Mountain is not a viable option. Is that -- in the department and the administration's view, is Yucca Mountain as a permanent geological repository dead?

SEC. CHU: Yes.

REP SIMPSON: You are going to establish a blue ribbon panel. How will that be different from the nuclear waste policy technical review committee or whatever they call it now?

SEC. CHU: Yeah, thank you for that question. We do know a lot more than we did 25, 30 years ago when this first started. In fact, what I just said about the potential for recycling would mean that you -- it would make sense -- I don't want to prejudge what this blue ribbon panel is going to do, but given where we are, given the very good hope that we could get a different set of reactors, Generation IV reactors that could burn down the actinides, given the hope that -- remember, before that there was the national policy was once through fuel use.

So if there is a real technological and economic possibility that we could be fuel -- recycling the fuel that you would want to then have storage for a couple of hundred years because this would be storage that would say as you get better and better at fuel recycling you withdraw it, (you cycle ?) it, and you continue to use those assets.

Then there will become (sic) a time when you don't want to do it anymore. It's not going to be viable. We have -- once the fuel is vitrified, as an example, or largely depleted, there's no call for it. And so then the requirements of storage would be you don't need to have access to it anymore.

So just given those two things would suggest that you can step back, take another look at it and have classes of storage. It probably might have to be distributed for a lot of reasons, including transportation. So it couldn't be just one side.

So these are some of the things that I would hope the blue ribbon panel would look at, again stepping back, and then coming back to us, coming back to Congress and saying you might need a revision of the Nuclear Waste Act, based on what we know today relative to what we knew 25 years ago.

REP. SIMPSON: Will your instructions to this blue ribbon panel be to also look at the alternatives of a permanent geological repository?

SEC. CHU: Yes. It's going to be pretty wide open. How do you go beyond -- you know, as you've said, it is what it is. So how do you go beyond the situation and give us a better future based on what you know today and also based on what we think will be happening in the next 50 years?

REP. SIMPSON: If a permanent geological repository will be part of what they look at, the most studied piece of Earth in the world is Yucca Mountain. Will they have the option to make a recommendation on Yucca Mountain or will that be off the table as far as this panel is concerned?

SEC. CHU: I think Yucca Mountain as a long-term repository is definitely off the table. I should say that, based on what we know today, there are geological sites -- if you don't want to have access to material anymore, going hundreds of years in the future, there are actually better geological sites.

REP. SIMPSON: So this potentially opens up all the sites that were looked at before, before Yucca Mountain was chosen, as well as many others as potential permanent repositories for nuclear waste?

SEC. CHU: Right. But the requirement -- again, I don't want to prejudge what the blue ribbon panel finds.

But if they say there's going to be a certain class of material that you don't want to have access to, it's okay to put it in there, seal it up, close the door, then other sites become actually more desirable -- sites that have been there for hundreds of millions of years that we know it's going nowhere, that changes in rainfall patterns and things like that won't disturb these things. So it becomes a different question.

REP. SIMPSON: It becomes a different question, but it's interesting that we say this one piece of Earth we're not going to look at, everything else we will look at, when this one piece of earth is the most studied piece of Earth in the world. I mean, you might as well take Disneyland off the potential sites also. You know, there are certain places we can take off. And I find it amazing that we would say we're not going to -- the blue ribbon committee is going to look at geological repositories, but the one geological repository we're not going to look at, that's had 55 National Science Academy studies done on it, as well as multiple other things, the one we're not going to look at is Yucca Mountain, which indicates to me that that's more politics than it is science, quite frankly, which disappoints me. But it is, as I said, what it is.

And probably before we find a permanent repository there will be a new administration and we'll find something else that we decide to do. And that's been one of my concerns with the Department of Energy, as well as other areas of government, all along, is that we keep changing directions, you know, every time we have a new secretary, a new president, a new NE secretary or whatever. They all have a different vision.

We all come to our positions with our histories and our prejudices and our biases and everything else. You mentioned that you would like to see an increase in the percentage of nuclear power. You come from a science background. Much of your budget, you said in your testimony, your emphasis is science, discovery and innovation. The one word you seem to have left out, to me, is deployment, because ultimately all of this only means anything if it's used by the private sector in producing electricity or other things that we're doing.

What is your vision of how we get these things? You talked about the mini-Bell Labs and all that type of thing. We have to get this stuff out into the field to be working. And when I look at your NE budget, the NP2010, enacted in '09, ($)177 million requested, this year ($)20 million. Gen-IV research and development, no mention of NGNP in your budget, the NE portfolio backs out $70 million for two of your energy hubs. So the NE budget is actually a decrease of $100 million. That doesn't really even take into account the fact that much of or some of the budget is used to address the pension shortfalls.

So we're going to have substantial decrease in actually getting and deploying the technologies out into the field. What's your reaction to that?

SEC. CHU: Well, as I said before, the NP2010 budget is work that is essentially being finished by the AP1000. And the GE one, the money allotted for the GE one, since General Electric has put that essentially on hold, slowed it up, so we thought it prudent to not allocate money for that. So that's why you see the budget decrease that you see. The work is going to be done on NP2010 and the authorization is for NP -- in 2010 anyway.

I agree with you, deployment is the key. Picking up in the private sector is absolutely the key. And so we are changing the way things are being done in the Department of Energy. There has been in the past, and I think all the members of the committee know about this, is there is an Office of Science that does superb support of basic science. And then we have technologies and there is a big gap between those. And there is a gap between some of the things that the technologies support and actually getting out in the private sector. So many of the programs we're doing are designed to bridge that gap, number one. The ARPA-E is designed primarily to sponsor the research that will be before industry, before venture capital picks it up. So it's a very short-term, three-year, maybe renewable to five years. After that, it's zeroed out. That project will have to find private sector support. So it's the seed money for pre-venture capital, pre- commercial.

Many of the other things -- the two undersecretaries, one for the technologies and the other for the science -- have agreed before they were signed on that they would work very, very closely together, that they're going to be helping in reviewing everybody's programs, they were part of the (lean up the team ?) under them in a very intimate way.

Again, we're trying to break this stovepiping and knowing full well that, at the end of the day, you want to use our intellectual horsepower to get something out into the private sector. That is the goal, just as it was, as I said before, with Los Alamos and Lincoln lab. You're actually trying to get someone to produce -- deliver the goods.

So I think if I had looked at the Department of Energy's history before, there were these so-called valleys of death. There was just not one. There were a few.

REP. SIMPSON: They still exist.

SEC. CHU: They do. And so you'll have to come and --

REP. SIMPSON: You've created some of them. (Laughs.)

SEC. CHU: I --

REP. SIMPSON: NGNP was there --

REP. PASTOR: Mike, I'm going to have to -- we have still other members.

So I'll give you a minute to, Mr. Secretary, to finish your statement, then go to Mr. Israel.

SEC. CHU: So I'm just -- I think there's no agreement philosophically where we both want to go. Let me just say that. And I'll be glad to work, talk to you about some details and find out your opinions if you think we're doing something incorrectly. But I think the end goal is exactly the same.

REP. SIMPSON: I'll follow this up on the second round. (Laughs.)

REP. PASTOR: Mr. Israel.

REP. STEVE ISRAEL (D-NY): Thank you, Mr. Chairman.

Welcome, Mr. Secretary. I've enjoyed our several conversations and do look forward to working with you in a partnership.

I do want to, in the spirit of friendship, share with you a very deep concern I have with the budget and that is on hydrogen fuel cells -- $140 million cut from last year, 66 percent reduction in EERE for hydrogen fuel cells.

I remember seeing the president visit the Jay Leno show when Jay Leno had a show late in the evening and he talked about his affinity for hydrogen fuel cells and I'm concerned that the budget numbers doesn't match that affinity at all.

I recently visited a GM facility in Honeoye Falls in upstate New York with one of our colleagues, Congressman Eric Massa. They are doing extraordinary work on research and development of hydrogen fuel cells. I drove on a car that they had deployed. I understand in your testimony to the Senate you said that this is a very tough call and explained that you need a refueling capability and we don't have that right now. It seems to me, as a matter of logic, that this is a chicken and egg issue -- that you're not going to have a fueling capability if you don't have hydrogen fuel cells and you're not going to have hydrogen fuel cells if you're cutting the budget by $140 million.

Your hydrogen technical and fuel cell advisory committee, I understand, did not recommend these cuts. And so I'd like to give you an opportunity to explain why those cuts were made and appeal to you to work with the members of this subcommittee, Congressman Massa and other interested parties, to see if we can develop a different approach that reaffirms this nation's commitment to next-generation hydrogen fuel cell research, development and deployment.

SEC. CHU: Okay, thank you. So let me first start and say that it's not only the refueling stations that are an issue. I think the fuel cells themselves have come a long way. They've made great progress. There are still some issues about the longevity and cost of the hydrogen fuel cells.

If I were to plot the best course for developing this so there would be significant deployment, I would probably go with hydrogen fuel cells. There is a centralized place where you -- also, the source of hydrogen, currently the predominant way is to re-form natural gas. It's not a matter of an infrastructure being built. It's an infrastructure that has to be as extensive as the infrastructure for gasoline and diesel, so that's hundreds of billions of dollars of, you know -- so that doesn't come overnight.

So one could imagine starting this in a warehouse with forklifts, especially indoor forklifts, where you want -- because there are air pollution problems and so hydrogen fuel cells emit water, makes perfect sense, they're centrally located. You can have a re-forming station in one place and refuel.

There is also an energy storage problem. Right now the best storage we currently have today is high-pressure storage -- 5,000, 10,000 pounds per square inch -- pretty dangerous stuff -- a very high pressure tank and not that much range, unless it's a huge tank.

So we have a storage problem. We have an infrastructure problem. You start by looking at local areas, like forklifts or postal service trucks or things like that to get it going, to prove the technology. In the meantime, we will be investing money in energy storage of hydrogen so that we can, for example, develop better methods that the hydrogen can be absorbed on surfaces that would allow the energy source to grow considerably. We will be designing better methods, looking at other types of things.

Hydrogen fuel cells, stationary hydrogen fuel cells, also, since they don't have, you know, these four concurrent technologies -- the storage, the infrastructure, the generation of hydrogen and the fuel cells and the cost of the fuel cells themselves. And once you work on a stationary one, the lighter weighting doesn't matter, the temperature doesn't matter as much.

So I think we will be continuing on stationary storage. The Office of Science will be continuing to invest in solving these other problems. And we'll be looking at trying to develop it in a graduated way so that you prove the technology in a more local setting where the infrastructure does make sense. But we'll be glad to work with you, this committee and the Senate committee on this issue.

REP. ISRAEL: Well, I appreciate that and I intend to work very closely with you.

I recognized that there are all sorts of problems with the technology, but I don't believe we're going to solve those problems by slashing budgets $140 million. You know, not to be too pedestrian, but there were plenty of people who said that there are all sorts of reasons not to do the Mercury project, not to do the Apollo program, all sorts of technical hurdles. We didn't take no for an answer. We accelerated budgets, we made those investments and we solved those problems.

So again, in the spirit of friendship and cooperation, I look forward to working very closely with you on what is an absolute priority for me and I know other members of this committee and the colleagues that we have in the House.

Thank you, Mr. Vice Chair.

REP. PASTOR: Mr. Rehberg.

REP. DENNIS R. REHBERG (R-MT): Thank you, Mr. Vice-Chair.

And, again, welcome and congratulations. It's always hard for me to zero in because of any congressional district, I literally have every form you can think of other than nuclear -- wind, solar, geothermal, biomass, oil, gas, coal. But it's interesting to hear you say that about Yucca Mountain, because where I want to go is an area, I want to thank you for being open-minded, and that's FutureGen.

Could you tell me a little bit about sequestration? Where have the changes occurred within the Department of Energy between Mr. Bodman and yourself and the thought process that goes into revisiting the issue? Because I sat in this committee last year and was told by your predecessor FutureGen's dead, dead, dead, dead. It will never be seen again. And we moved off into the regional partnerships, the seven projects. But could you talk a little bit about sequestration, its opportunities, the technology available. Is Mattoon still a viable site? Is it going to be the place that the demonstration plant's going to be? And a little bit about the partners -- I spent a lot of time dealing with those governments from India, or companies within India, China, South Korea to try to get them to be a partner. And when the rug was pulled out from under us, it's not only embarrassing it's very costly, it's time consuming and it sets the project back a ways.

So if you could just talk a little bit about the thought process within the Department of Energy on sequestration.

SEC. CHU: Okay, so the thought process is pretty linear. What I was thinking is that roughly 50 percent of our electricity is generated by coal. The United States has the biggest coal reserves in the world. China and India and Russia and Australia have enormous coal reserves. No matter what happens in the United States, India and China will not, and Australia probably would not turn their back on coal. And, actually, neither will Russia. I've been talking with some Russian representatives.

So it's very important that we develop the technology that captures and also that safely sequesters carbon from coal mines, because of this huge asset. So we need to develop these technologies. These technologies don't exist today ready to go. There are all sorts of issues that span the gamut in sequestration from legal issues to the longevity, storage, things like that. People I've spoken to over the years, not just since coming to this job but over the last couple of years, tell me that these are surmountable issues. There's no show stopper inherent in any of this.

REP. REHBERG: There would be no doubt that the decisions that were made over the last three years delayed the project or projects. Does your budget reflect trying to catch up? Can it, will it accomplish what we hope to accomplish and that's to solve this issue as quickly as possible so we can get on with building coal-fired generating plants?

SEC. CHU: If seen in the light of also the economic Recovery and Reinvestment Act, absolutely. I mean, there's a considerable amount of money -- there's $3.4 billion that's set aside for carbon capture sequestration.

REP. REHBERG: So what would the timeline be, then?

SEC. CHU: Well, we are in discussions, as you pointed out. We've reopened discussions with the FutureGen Alliance and I'm hopeful we can come to some agreement, but we're in the process of negotiations. It's open, it's going forward. I'm optimistic.

REP. REHBERG: I look forward to working with you on it if you need some help in trying to push that forward with the alliance or with the appropriations. We're kind of at a stalemate in Montana. It's always interesting when somebody says, you know, I'm all for coal-fired generating plants -- however, not until we have sequestration. What they're really saying is they're not for coal- fired generating plants. We're kind of at an environmental stalemate.

I appreciate Mr. Edwards' comments because I was going to talk a little bit about oil, and Mr. Simpson's as well, because you can see that we need you to be stronger than some of the secretaries in the other departments.

Our problem is, you know, it's great to talk in theory about things like biomass. But if we can't have access to our forests because people are standing in the way at the Department of Interior, it serves no purpose.

So I guess my charge to you, or my plea, is be tougher than them and convince them that you cannot move to alternatives until they're in place. And my fear is much of what happened to Montana's economy. We gave up on natural resource development because we were all sucked into believing the next generation was fiber and telecommunications. We forgot to build the bridge between the two economies. And it's taken us awhile to overcome.

And I fear that nobody's paying attention to the global perspective of if we jump right in and only focus on alternatives, without a recognition that we're not there yet technologically, we as a country are going to be real sorry when the lights do go out in Arkansas or in California because we haven't done what's necessary to build the bridge to the next technology by taking advantage of the resources we've got in place now.

So I look forward to working with you and thank you.

REP. PASTOR: John Olver.

REP. JOHN W. OLVER (D-MA): (Off mike.)

REP. PASTOR: I'm just following orders. They gave me the list and I'm following the names.

REP. OLVER: In order the people came in or something like that?

REP. PASTOR: Yes, sir.

REP. OLVER: Oh. I thank you very much.

Thank you very much, Mr. Secretary, for being here, for taking this job. I hope in this process you will have some patience with those of us who have to show results and take our exams every two years. And most of what you're doing in the science area, it looks like it's pretty long-range stuff. And at some point here I'd like to ask a couple of questions about how you give exams for what it is that's being done, how you do the oversight and the evaluation and so forth for that.

I would like to comment to my friends Mr. Simpson that for -- I was wondering exactly where he was going on the Yucca Mountain and it seems to me that one of your orders to your blue ribbon commission should be that the site needs to be offshore or off-planet, or else each one of us might begin to worry about where it was going to be in our district, that it might, of course, be in the lava flows of Oregon or Idaho or something as opposed to Yucca Mountain, coming out somewhere farther down the road.

You don't need to answer to that at all.

I want to explore with you your science programs. I've gotten up to ask a question about where in the budget were the various hubs. And I understand that they are pretty well spread around, that a couple of them must be in EERE, a couple of them must be somewhere in the nuclear energy program. Which ones would be in EERE, could you tell me? I see a list of eight topics. I think that's where the hubs are going to be -- one in each of those topics, I take it, that's the intent.

SEC. CHU: Right. That's the intent.

REP. OLVER: Which ones are going to be in EERE and which ones are going to be in nuclear energy?

SEC. CHU: Well, there's two that relate to nuclear energy. One is materials in extreme conditions.

REP. OLVER: Extreme materials.

SEC. CHU: Yes. And the other is in design of new processes, new plants, new reactors.

REP. OLVER: What -- I don't see which one of the phrases that would be covered by, the design.

SEC. CHU: Hold on just a sec. They're looking to --

REP. OLVER: Which ones would be in EERE?

SEC. CHU: In EERE?

REP. OLVER: In EERE.

MR. : E-E-R-E.

SEC. CHU: E-E-R-E. Oh, sorry. Let's see -- solar electricity. This is new generation of photovoltaics and also buildings systems design.

REP. OLVER: Ah, I guessed those correctly.

SEC. CHU: Okay.

REP. OLVER: There must be some others.

SEC. CHU: No, those --

REP. OLVER: But I've very curious what would be, and I'm still not sure which ones are in nuclear energy. I'll find them.

SEC. CHU: Oh. No, I have it here -- extreme materials and modeling and simulation.

REP. OLVER: Modeling and simulation. That's in nuclear.

SEC. CHU: Modeling and simulation has to do with using those techniques, high-performance computing to design new reactors.

REP. OLVER: Okay. You say these are modeled after the bioenergy centers. The bioenergy centers, there's a group of seven of them that were authorized in the legislation in '07 relating to the previous authorizations in '05, the Genomes to Life program in '05. And the energy, bioenergy centers had three major purposes. They were for facilitating bioenergy production, for environmental remediation and for CCS, carbon capture and sequestration.

Now, only three of those were ever started, and I don't -- are those three to be continued in the new legislation?

SEC. CHU: Yes.

REP. OLVER: But their authorization ends. Their authorization terminates at the end of '09. Are you proposing legislation to authorize those?

SEC. CHU: Oh, I didn't know that the authorization was the end of '09. In that case, yes.

REP. OLVER: I believe that was the case.

SEC. CHU: I don't know.

REP. OLVER: I think that authorization terminates.

SEC. CHU: Okay. I hope not.

REP. OLVER: Well, do you intend to do others of the seven? Seven were -- if you're going to do that --

SEC. CHU: Yes.

REP. OLVER: Do you think that that's worth doing? You're doing three bioenergy production centers already.

SEC. CHU: Right. Actually, one of them -- there is going to be a Bell Lab --(inaudible) -- energy hub on carbon capture sequestration.

REP. OLVER: Yes, carbon capture finally is being done under your hub idea.

SEC. CHU: Right.

REP. OLVER: Though the hub idea is a bit different.

SEC. CHU: No, actually, they're not that much different.

REP. OLVER: Well, but you've got them laid out in a much longer term. In essence, the three that are there are sort of mini hubs of a series of universities doing university research. You're thinking your hubs are bringing in a whole bunch of other entities into the hub, not just universities, I take it.

SEC. CHU: No. So let me try to explain. There are those three that exist today. The central one is -- actually, the lead is not UC Berkeley but Lawrence Berkeley National Laboratory.

REP. OLVER: Lawrence Livermore.

SEC. CHU: Lawrence Berkeley.

REP. OLVER: Lawrence Berkeley.

SEC. CHU: Livermore is a partner, but a minor partner. Sandia's a partner, UC Berkeley's a partner, Carnegie Institute for Plant Biology is a partner. But it's all under one roof.

REP. OLVER: When I first served on this subcommittee, there was some question about how we were going to decide what each of the national labs was doing. And so there was some question about whether we were doing the things that were most appropriately to be done or what should be done in the future at Sandia and Los Alamos and Lawrence Livermore, Argonne, Stony Brook and Oak Ridge and so forth.

Is it possible that those science labs will be a part of one or another of these hubs? Or are you intending to create hubs that will be -- you say in one building. You talked about it being in one building, which is more the mini Bell Labs. That wasn't a single building, by any means.

SEC. CHU: Okay. So, let me -- actually, in Murray Hill it was one single big, big, big building, but never mind.

REP. OLVER: Maybe I'm looking at --

SEC. CHU: There were many Bell Labs. But that's not important. What is important is that these hubs -- the template of the hub is actually very, very close to those bioenergy institutes. Two of the bioenergy institutes are led by national labs, Oak Ridge and Lawrence Berkeley National Lab. The other one is led by University of Wisconsin.

And so we're throwing this out, open to both national labs and universities. The ideally under one roof still applies, meaning that ideally you get these people together. And so what these three institutes have done is they've said, where are the assets in the country? The one I know best is the one I helped start, which is Lawrence Berkeley National Lab. We looked regional -- where are the assets in the country?

REP. OLVER: Excuse me, Mr. Secretary. I don't have enough time for you to explain this in this venue.

SEC. CHU: Okay, sorry.

REP. OLVER: In fact, my chairman is going to pull a hook on me and very shortly here.

But the hubs look as if they're pretty long range. There's a five-year. You're contemplating the possibility that, if they do good work, they are going to go on for another five years. The EFRCs are one university usually, although they could be more. In fact, a hub could be made out of three universities that were otherwise doing work in that area and might end up answering your RFPs when they go out. It's a collaboration of some group of people who think they're working in those areas and have something big to offer. The RFPs are going to be available --

SEC. CHU: Right.

REP. OLVER: -- to groups that wish to collaborate in an area that they think they have something to offer.

SEC. CHU: Right. But the EFRCs and the hubs are very different in the sense that the EFRCs are considerably smaller.

REP. OLVER: They are only one university, aren't they, the EFRCs?

SEC. CHU: No. Many of the EFRCs, they're collaborating with other groups as well. They take collaborations.

REP. OLVER: Well, all right. Are you likely to do the bioremediation kind of -- that was one of those original centers. One of the goals in the original centers was there. There seems to me to be lots of waste being produced and potentially to be produced by (either ?) bioenergy or nuclear or the use of coal that could take bioenergy -- bioremediation as part of the cleanup.

Do you intend to RFP something like that if they become -- if they are reauthorized?

SEC. CHU: Well, bioremediation, we would certainly fund. But we made decision not to make that a major hub. There are only eight of these hubs. And so they're -- again, in our judgment there are many more things that we think are ripe for rapid research that could lead to rapid deployment. And if you look at the areas in these hubs, that's the decision we made.

Bioremediation will still be supported in, for example, Office of Science (BR ?) programs, other things like that. So it's not that it's off the table, it's just that with regard to hubs we made a decision based on what we think was rapid --

REP. OLVER: Well, let me ask one just -- last, very quick one. I have a whole other line of questioning that I'll take up privately. But are you funding -- is -- does your budget include funding for the '10 for the three that are presently --

SEC. CHU: Yes.

REP. OLVER: -- the three --

SEC. CHU: Yes.

REP. OLVER: -- bioenergy research centers?

SEC. CHU: Yes.

REP. OLVER: So they are there?

SEC. CHU: They are there.

REP. OLVER: Do you intend to ask for authorization for the 10 hubs that you're proposing?

SEC. CHU: Yes. The three biocenters were started on a five-year with the possibility of renewal for five years. The new hubs are along the same --

REP. OLVER: And the funding pattern is essentially the same for the --

SEC. CHU: Correct.

REP. OLVER: -- that is the basic similarity of the model?

SEC. CHU: Correct.

REP. OLVER: Okay. I expect to ask for authorization legislation. It's not in the energy bill that -- big energy bill that's moving around at the moment, is there?

SEC. CHU: No.

REP. OLVER: Okay.

SEC. CHU: But it -- I don't know --

REP. OLVER: It's a huge expenditure and a huge commitment not to be authorized in some kind of a way.

SEC. CHU: Okay.

REP. OLVER: It's hanging out there.

SEC. CHU: Okay. Got it.

REP. PASTOR: We have about 30 minutes left, and I -- Ryan just left, so we have, I think, three members who have not asked questions. We're going to allow them to ask the questions. And then whatever remainder either myself or other people will finish it off. And then we'll have a few minutes for closing remarks.

So Rodney, your --

REP. RODNEY ALEXANDER (R-LA): Thank you, Mr. Chairman.

Mr. Secretary, good morning. It is still morning.

In your budget request, the R&D for solar power energy has almost doubled. In fact, it grew a lot more than the others. What justifies that? Do you have that much confidence in that form of energy?

SEC. CHU: What justifies it is actually -- again, looking forward -- first the -- there's a tremendous potential. Right now, if you look in the short term -- this year, next year -- if you look at the price, cost competitiveness of photovoltaics -- and as an example relative to other renewables, relative to fossil -- it's not there. It requires great subsidies in order to get installments. But the potential for it is huge, that several -- you know, 5 percent of the world's deserts can supply all the electricity; if we could transport it, we could store it. And that's not that much of the world's desert -- the -- if it's, let's say, 20 percent.

So what I see is I see some rapid developments in nanotechnologies that could create a new generation of photovoltaics that can go beyond silicon -- either polycrystalline or single crystal silicon.

There are already some thin film technologies like the one Solyndra is developing that show promise. But in the research labs there are many other things that are being looked at that can even have greater promise.

So it's, you know, this huge thing out there -- it's like why we fund fusion, which that is not going to be viable -- commercially viable, let's say, for the next 50 years. It's a huge potential. Photovoltaics, one hopes, could be there sooner.

REP. ALEXANDER: In your research for biofuels from biomass there's no mention of algae. And we know that we have wetlands all across the United States and some marginal lands that serve very little purpose except to hold the world together.

Do you not believe that there's a potential there for --

SEC. CHU: No there is potential for algae, and we will be funding -- are funding algae projects. So that's part of our biofuels portfolio.

REP. ALEXANDER: Okay. The companies out there today that exist that are using natural products to fuel their engine needs and maybe are creating some materials internally that might have been waste at one time, and they're now using that to fuel their generators and they enjoy a tax credit -- do you think they're -- those tax credits might be in jeopardy, which would lead to an increase in cost for these companies?

SEC. CHU: Well, actually -- well, I don't -- the honest answer is I don't know. But I'm a big fan for using waste and using that waste and using it to create energy. I think it makes a much more efficient economy.

REP. ALEXANDER: Well, there are some companies enjoying those tax credits now that are afraid that, for instance, if there are natural products that they're using to fire their boilers and the government creates a program over here that would encourage another individual to take those raw products and convert them to an energy and then sell them back to the plant for fuel sources when the plant's been using those raw materials as a supply of fuel -- and if we take that credit away from them then that indeed is going to lead to a tax increase for them.

SEC. CHU: Well, I don't know the details. But from just listening to you, if there -- for example -- I'm surmising this is some sort of biowaste that they would put into the boiler -- burn it. And you know, burning biomass and using it as a supplement for generating power is something that works. It's very effective. And so on the face of it, I'm -- I would have to look more into it. But it seems to me that that's certainly a suitable way of using waste products.

REP. ALEXANDER: Thank you.

REP. PASTOR: Lincoln?

REP. LINCOLN DAVIS (D-TN): Mr. Chairman, thank you.

Mr. Secretary, I appreciate you being here, and I know that -- as I look at your background, it is great to have a scientist that will be -- that is our secretary of Energy.

I live in a rural area, and I sometimes speak just regular rural language when I talk. And I'm not ashamed of that, as our gentleman from Arkansas is. (Laughter.)

And we have a terminology that we use that you don't you never eat the seed corn. You always keep it for the next year and the next season and the next season. And I think over the last several years we should have been applying that to our research and development, when we talk about energy in this country, because back in the late '70s when Carter talked about an energy policy that would make us energy independent or close to energy independent and self-sustainable -- we kind of forgot that. And so we started consuming the seed corn, so to say, in some other area. We stopped the research and development that I think we should have been doing the last 30 years. My hope is that we don't miss this opportunity.

So in doing that, in saying this and setting the mode of what I want to ask -- I look at all of the proposed sources of energy that we will have in the future -- nuclear, solar, windmills, biomass, coal, natural gas, hydro, all of the different areas that we're talking about -- and I find here that it seems we just -- that we're just talking about climate change instead of energy -- becoming energy independent.

In essence, I think that we should look at an energy policy based upon it being economic security and national security. And I think that has to be a part of any policy that we establish. Certainly, climate change, we need to realize that that's occurring and that if we don't do something we won't have to worry about national security or economic security. We won't exist anymore.

So I do believe that climate change is occurring.

Couple questions I've always -- if you mention nuclear energy, someone says, well, it's going to take a long time to do that. We produce, what, about -- for an average reactor -- about 1,500, today, megawatts?

SEC. CHU: Yeah. A gigawatt.

REP. DAVIS: Rough to that?

SEC. CHU: Yeah.

REP. DAVIS: Okay. If we -- how large of an area and how quick could we produce a solar farm that would produce that type of energy? How long would it take us to do that? And do we have the research available to actually make that possible?

SEC. CHU: No. I would say that the solar farms that we're anticipating today, whether thermal or photovoltaic, are one-quarter that size.

REP. DAVIS: What?

SEC. CHU: One-quarter. And the scale of the ones that I've seen, they're a scale of 100, 200 megawatts, instead of 1,000.

REP. DAVIS: And how long would it take us to actually -- do we have the technology today to actually put those in place? And how long will it take us to actually build that farm or that facility that would produce those 100 megawatts?

SEC. CHU: Well, there are a couple of projects that I know of, particularly solar thermal, that the timescale would be a couple years. I'm actually more concerned about the long licensing period of the nuclear reactors than the solar thermal farms.

REP. DAVIS: You see, I'm concerned about whether or not we're going to be able to produce 20 percent or more or 15 percent or more of non-carbon-based produced electricity in this country.

And for me, looking at doubling or tripling the number of nuclear facilities that we have -- maybe we need to start the process, expedite the process -- your department needs to -- of actually working with the Nuclear Regulatory Commission to see that we're able to expedite the licensing of nuclear facilities.

I'm not saying that's the only answer, but it seems today the only thing we hear is biomass, windmills and solar panels are the only want that we're ever going to reach the level of producing energy we need without carbon emissions.

And I -- I'm just asking you, is that plausible to assume that we can do that?

SEC. CHU: Well, if -- I'm agreeing with you. We're 20 percent nuclear today. If you look at the wind and solar, thermal, photovoltaic, it's less than 3 percent. We have hydro at 6 percent. It's going to take a while to grow that 2.8 percent. And these sources are variable. And so although there is -- you know, I'm a big believer in renewable energy. You also have to recognize where we are today. And it's going to take awhile to make this transition. So --

REP. DAVIS: As I look at the enriched uranium that we have in different labs -- located, certainly, in Oak Ridge -- I understand we have maybe hundreds of years, possibly, of - and maybe I'm -- maybe you can't answer that question. Maybe I should have -- made a statement I shouldn't have made as far as security-wise. But don't we have available energy today where we can convert it into nuclear energy for a long, long time for this country?

SEC. CHU: It depends on what we're going to do with the fuel cycle, largely. The way we do it now where you're only using less than 10 percent of the energy content of the fuel -- and so that's why it -- that's where we're putting money into research for closing the fuel cycle.

REP. DAVIS: We're having some success at our labs as well, especially in Oak Ridge, on finding ways where we can maybe reuse 89, 95 percent of the rods? Is that correct? Or am I hearing that from some scientists? Or is that just a hope and a dream?

SEC. CHU: Well, it's --

REP. DAVIS: As a recycle.

SEC. CHU: Eighty percent are numbers that I've been hearing. It's not only Oak Ridge, it's Argonne, and especially it's Idaho that are looking into these issues.

REP. DAVIS: We have a lot of money today in the omnibus bill that was passed. And of course the -- some folks refer to it as the stimulus package. I refer to it as the American Economic Recovery and Reinvestment Act, because that's what we hope that will happen. Lot of dollars there. We have -- many of the labs today -- have got 17 of those -- some of their contracts are coming up for renewal or for competition again.

What I'm finding is that with all these dollars that we have that we're going to be spending and then a competitive bidding process, in many cases only one -- which is basically the incumbent lab or the contractors -- the ones who only bid on those bids. Would you consider looking at maybe extending those contracts for a year or two years, five years, as we go through this process today of research and development that we're doing to try to refine the potential energy sources we have for our country?

SEC. CHU: Well, there's two parts to that. I think I certainly -- I don't know what the statue of limitations are regarding the rebidding.

I went through a process -- when I was director of Lawrence Berkeley Lab, we were the first lab that had to rebid. It was very -- I started this one or two months in the beginning of my tenure. A lot of money was spent. A lot of time and energy was spent, and there was one bidder. So I share your sympathy. (Laughs.) So I would look at it.

But again, I don't know what the statutes are, but I would certainly be willing to work --

REP. DAVIS: Obviously, the law might have to be -- but I'm just saying I think --

REP. PASTOR: Lincoln, I'm going to have to -- we're running out of time. And I want to give Salazar a chance, so.

REP. DAVIS: Thank you.

REP. PASTOR: And Ryan and --

REP. JOHN SALAZAR (D-CO): Well, I want to thank you, Mr. Vice Chairman.

REP. PASTOR: I didn't want to forget you, John.

REP. SALAZAR: Well, I did get here early, but I know that you made a good selection in letting me ask a question that's already been asked.

Mr. Secretary, I want to follow up a little up a little bit on what Mr. Rehberg said on clean coal-burning technology.

How committed is this administration in moving carbon sequestration and issues like that forward?

We have massive resources in coal in my district and I think in probably every member's here. And are we really -- you don't hear that coming from the administration.

SEC. CHU: Really? Hear it from me. Yes. (Laughs.)

I say that the world is not going to turn its back on coal. If we don't fix this problem, okay -- so we are very committed. Every time I talk to my counterparts in foreign countries, I say let's get serious and also let's work very closely together. So -- because this is a huge undertaking and has huge costs to pilot these things.

And so we -- and this is something where -- let's forget about competitive advantage, because most of the investments of a power plant will be made in that country. So let's develop together these methods. But we're very committed to doing this.

REP. SALAZAR: But if we lead the world in technology development, we can actually help sell that technology and recover some of our cost, I believe.

Let me just move forward. I'll be brief.

On the cybersecurity and the electricity power grid, could you give me your comments or your thoughts?

SEC. CHU: Yes. Very important issue, I think, because this is the power of the country, and as we go into a new distribution system that we will definitely need going forward in the future, because we're going to be anticipating there'll be more renewables which have variable sources of power, which means you'll have to be switching around power. It has to be done on an automatic basis. You can't use the old technology, which is call up the next power station and say, send me some power. It -- because when a cloud goes by, the wind stops blowing. It's got to be done automatically.

We have to manage two-way flows that more and more buildings will have -- will be generating their own energy that we'll be putting back onto the grid. I do think in five or 10 years we'll have substantial introduction of plug-in hybrid vehicles -- again, two-way flows.

And so you need all these things, which means you need an automatic system.

Also, by the way, it will help us deploy and use our energy resources better, because you can reach in and you can -- in those 1 or 2 percent of the days you can actually throttle back the use so that you can -- because there are a lot of energy assets that are sitting there only for that 1 or 2 percent of the days and the rest of the time they're sitting idle. And when they're sitting idle it means that you're getting no return on your investment.

So all -- the grid will allow all these things to happen much better.

Then, having said that, you know, there are hackers all over the place that would just love to have incredible mischief in bringing down something, except now this is different. This is our electricity. This is not your PC. And so it's a very, very big deal that we develop methods. The secretary of Commerce and I are -- first, we're pushing very hard on developing communications standards, which, of course, deeply embedded in them are the security issues as we go forward in the smart grid. How are the companies going to develop standards that they can do -- and security protocol standards?

So we've been pushing this. It was authorized two years ago. What we found since we took over is it has gone very little. It's essentially nowhere. I found this out personally, because we organized a series of meetings.

I sat on the second one where there were scenarios and the people in these companies who were presented scenarios -- okay, what do you have to think about in order to develop these standards? There would be more than 100 new standards that would have to be developed. And listening to them talk about the scenarios -- this was the first time they've thought about it after two years.

So we're pushing as hard as we can to get these things. It is of great concern.

Now the good news is that because of -- between the Department of Defense, NSA and Department of Energy, there is a lot of expertise out there on security -- cybersecurity. I mean, because we've had to protect nuclear secrets for so long, there is a lot of expertise. And so that expertise will have to be tapped. But this is pretty serious.

REP. SALAZAR: Thank you, Mr. Vice Chair.

REP. RYAN: Thank you, Mr. Chairman.

I want to go back to -- Mr. Secretary, thank you. I was glad to see your appointment and I'm glad you're here helping us.

I have a couple of questions. One I want to back to, the hubs -- you were starting to say that there was going to be a regional flavor and you were going to -- that the hubs were going to hopefully tap into regional assets.

Can you just talk a little bit more about that?

SEC. CHU: Regional assets in the sense that -- I don't mean that we're going to make a hub in this part of the country, that part of the country. Overall, the major selection criteria will be, how good a scientific team can be put together? And high on that list is, how good are the managers of that team going to be? But regional in the sense that, ideally under one roof -- it's been my experience in my career that if you're under one roof and you eat lunch every day and all the people in that building are marching towards a goal, whether it be figuring out -- inventing new building systems technology that industry can use -- (inaudible) -- 80 percent more energy efficient and economically pay for themselves in 10 years.

If you have everybody in that building working towards that goal and they're eating lunch together every day, the -- and it's well managed, the probability of remarkable progress will be higher than if there's just a onesie, twosie, here, there, separated.

So that in my experience -- and what I saw at Bell Laboratories when they got serious about something like the invention of the transistor -- you can go much faster.

REP. RYAN: And you in your remarks -- in your written remarks you talked about commercialization, and how do you, as you organize the hubs, what is the approach to commercialization? What is the role? I think the vice chair asked early on about private sector engagement, so can you talk a little bit about commercialization and --

SEC. CHU: Sure. We are expecting these hubs to have partners in and strong connections with industry. The two that I know best on the biology hubs have embedded in their structure and in the start connections with companies.

For example, the biofuels hub that -- led by Berkeley Lab -- they made a decision to just bypass ethanol. They made -- in the first six months they've been able to reprogram yeast and bacteria to make diesel and gasoline and jet-like fuel form sugar.

And because of the technology that they've developed they are now talking with automobile manufacturers and saying precisely what type of fuel would be ideal for the engines in going forward.

So that's just one example of how we want these hubs to be talking to their customers as an integral part of what their research is. It's -- this is not academic stuff far out there, you know, putting stuff between journals. It's really delivering some goods.

REP. RYAN: Well, that's, I mean, that's the concern, obviously. And that's why you're changing it.

So would -- for example, you're doing the batteries, the battery hub. Would General Motors be a partner -- just throwing General Motors out there, but would a General Motors or a car manufacturer put money into the lab as well, put resources into the lab as well? Or is it more the people working at the hub calling them saying, hey, what do you need?

SEC. CHU: You know, that's a very good question. I think in the energy-efficient building systems there are companies out there that are building control companies. When I was the director of Lawrence Berkeley Lab, the last year and a half I was director we were talking with the likes of, for example, United Technologies that makes building control systems and makes air -- Carrier air conditioner, all these things.

So what one would want ideally is -- and they were willing to put in money -- 3 to 5 million (dollars) a year. Okay. And so ideally -- and you get real collaboration -- (laughs) -- if you get companies that are willing to pony up and say, okay, in addition to the money the Department of Energy's funding -- to make -- and to make it serious, let's put some significant skin in the game.

At the very least, it would be lovely if they would say let's send their scientists over there and put them under that same roof.

REP. RYAN: This is part of --

REP. PASTOR: Can we ask Mr. Fattah here for his questions?

REP. RYAN: No. No, I'm kidding. (Laughter.)

REP. CHAKA FATTAH (D-PA): (Audio break) -- Mr. Chairman. Let me --

REP. RYAN: We'll pick this up later, Mr. Secretary.

REP. FATTAH: Let me, first of all --

REP. PASTOR: Can -- before you -- you're going to have so many luncheon dates with all these members that -- (laughs) -- you're going to have to clear your calendar for a few weeks.

SEC. CHU: As long as they don't mind -- I don't have to eat, because -- I'd be glad to watch them eat while I talk. (Laughs.)

REP. PASTOR: Okay.

SEC. CHU: It's -- I'm trying to lose weight. (Laughs.)

REP. FATTAH: Let me first acknowledge our chairman and his extraordinary work, even in his absence. And I hope that at some point soon he's returned to the committee.

But I want to thank the vice chairman for recognizing me.

Mr. Secretary, it's good to see you again.

The president has indicated his seriousness about this question of energy and energy independence for the country by his appointment of you. And I think that's been well recognized by everyone who's commented. We're very happy that you are leading the department.

I'm sure you're going to love science even more the closer you get to politics and this political environment.

SEC. CHU: (Laughs.)

REP. FATTAH: But I have three issues that I wanted to raise, and to the degree that you can't get to them today, you can supply them for the record.

But I'm very interested, on one level, about the energy efficiency block grant. And I'm very pleased at what we've seen thus far in local communities across the country, as the department has moved very aggressively to get those dollars out the door.

We want to continue to work with the department on some of the efforts to make this program as successful as we want it to be, in terms of having local governments at city -- at the county levels be able to work to have a more energy-efficient environment in their locales.

Secondly, I'm interested in the loan guarantee program, both on the renewable side and on the nuclear side. I join my colleagues who've spoken in favor of nuclear in the sense that I think it is the quickest way and the cleanest way to proceed. I come from a state that has a number of nuclear facilities and I think we need to be very aggressive.

I also think that in many instances the licensing process itself is more challenging than the financing, that it's not so much just -- you know, you might be able to do nuclear without a loan guarantee, but you can't do it if you have such an uncertain environment in which the licensing process proceeds along. So I appreciate your earlier comment that you're interested in the challenges that lie there.

But I'm also interest on the renewable side and that when a number of entrepreneurs who are very concerned about the -- and I've spoken to you about this before, about the passivity, if you would, of the department over these number of years to get any of those dollars on the street. And I'm interested in how we can make that work even more efficiently and whether there could be even marriages with states like my own that have been aggressive in terms creating their own programs and loan pools for small entrepreneurs in this regard.

The last thing, and the one priority that I'd like to follow up with your senior staff around -- and I don't have to have lunch with you. I just need to see whoever is actually in charge of this Re- energize effort, this education effort, the $115 million. I'm very interested in how that's going to be worked through, because I think that that's where the rubber really does meet the road, that we need to be training more people like yourself if the country is actually going to meet its scientific challenges going forward.

And we have a dearth of Americans of any stripe proceeding and focusing on terminal education and any of the hard sciences. And so I'm very interested in that effort.

So those are my three issues: Re-energize, which I'd actually like to do some follow-up, the loan guarantee on both sides -- the bifurcated, both on the renewable and on nuclear -- and the energy block grants.

So I would rest my case there.

Thank you, Mr. Vice Chair.

REP. PASTOR: Before I let our ranking member close with his statement --

REP. FATTAH: Are you going to let the secretary respond to my questions?

REP. PASTOR: Oh. I thought you were going to meet with his staff and get --

REP. FATTAH: (Off mike.)

SEC. CHU: Very, very quickly: I think with regard to loan -- I'll stick to substance things. There's this 20 percent requirement that these companies come up with an additional 20 percent. Given today's tight credit markets, we'd be willing to work with the states. Some states are already trying to finance the other 20 percent. And to the extent that it's permissible in statue, we would be willing to work with the states.

And Re-energize -- very, very important. You know, I was a member of that committee led by Norm Augustine that led to that report "Rising above the Gathering Storm."

The path forward in how the United States has prospered in the 21st century -- the answer was very simple: invest in the intellectual capital, from K through 12, all the way up. You know, put in tax credits that allow companies to invest in research so that they can properly use that intellectual capital to be trained all the way up and down the ladder. That's the simple answer.

So I'm now glad that I'm in a position to try to carry out some of that stuff. ARPA-E was part of that -- in that as well. And I was -- went before, I think, two congressional committees saying what a good thing ARPA-E was because it will help us get some of this intellectual capital out into the market and deployed.

So again, it's ironic that -- I don't know, that was in 2005 -- that in 2009 here I am having to deliver some of the goods. (Laughs.) It's much easier to just talk about it. (Laughs.) And you know, the energy investments, you know, it's a big deal to us.

So I'll be glad to meet you.

REP. PASTOR: Rodney?

REP. RODNEY FRELINGHUYSEN: Thank you, Mr. Vice Chairman.

I now want to thank you, along with Mr. Pastor, for your testimony this morning. I'm sorry that the hearing was limited to two hours, because I know there's a lot of excitement that you've gotten a great deal of money under the Recovery Act. And I'm sure we'll be watching to see how you spend that.

But it's unfortunate we didn't really have a opportunity to concentrate on your responsibility and our responsibility of issues that relate to the nuclear protection and reliability of our nuclear stockpile.

I know there's a lot of excitement on the renewable energy side of things, but to me -- through this committee and through my work on the Defense Subcommittee on Appropriations -- I'm concerned just -- I say for the record -- whether you have the money and we are making substantial enough investments in those who are key movers and understanders of that -- the reliability of the stockpile and our ability to deliver to our military customers, you know, on a reliable basis.

I don't need to have you respond to it, but I think it's unfortunate, since that is historically really the main responsibility of the secretary of Energy, that we really haven't had a chance to sort of discuss that and get the level of reassurance that I think we deserve.

Thank you, Mr. Chairman.

REP. PASTOR: Thank you.

Going back to Fattah's question that dealt with regaining our energy science and engineering, it's interesting, because I read -- on Page 5 of your testimony you describe it, and it goes from K to 20- plus. And you talks about grants, master's degrees, higher -- et cetera. But you end with -- and I think even when you deal with the community colleges you're talking at the higher levels.

But since you start form K to -- let's say from K to 8th, it says, "an increased public awareness, particularly among young people, about the role of science, technology can play in responsible environmental stewardship.

"

I would tell you that the problem is bigger than that. And my concern is that many of these young students still do not have the knowledge, working knowledge, comprehension in science and math. And so the awareness can be developed, I think, if they have teachers that can teach science, if they have teachers that can teach math effectively.

And I would suggest to you that probably the National Science Foundation may not be the only federal agency to work with. But I know that in the Department of Education they have a STEM program that is trying to encourage young men and women to look at math and science.

And so I would encourage you to plug in wherever you can so that the young people can get that basic education of math and science, and with that, they'll become more aware of that relationship to our environment. So I would strongly encourage you to get to the root problem -- (laughs) -- that our kids aren't getting enough math and science in their education.

And with that, you can close the hearing. Mr. Secretary, if you have a response, I'd be happy to take it, if not, thanks for being here.

SEC. CHU: Sure. Very briefly, I agree with you. We are partnering with the NSF. And we should also, not actively yet, be partnering with HUD -- not HUD but Department of Education -- on K through 12. Both the teaching of science and math teachers -- we have a couple programs that are being led in the Department of Energy and national laboratories that actually train teachers, science teachers, high school, junior high school, even elementary school teachers during the summertime. Those programs actually show remarkable improvement, particularly in the math scores. You help the teachers, and the students show this improvement over a couple of years.

So that's -- that's a very big deal. And so we're going to be doing things of that nature. This is our feedstock of tomorrow, and so it does begin in K through 12. And so we'll be -- tens of millions of dollars. And as we figure out better ways of putting the money, we would look towards increasing it.

REP. PASTOR: I thank you for this morning, and --

SEC. CHU: One --

REP. PASTOR: Yes, Mr. Secretary?

SEC. CHU: One last comment for Ranking Member Frelinghuysen.

When the NSA was first formed there was an advisory committee. I was on that advisory committee. So actually, the role in nuclear security goes way back in my history. And I do think we did -- although we did not talk about this that much, it is a very important part of what I have to do and what I do do. And let me just say there is --

REP. FRELINGHUYSEN: I'm respectful of that, and -- but as we've sharply reduced our nuclear stockpile, which a lot of people don't give us credit for -- but as we continue to even cut it even more, it is important that we keep that institutional memory and expertise and technological advantage that's so essential.

SEC. CHU: I agree with you.

REP. FRELINGHUYSEN: Thank you.

REP. PASTOR: (Sounds gavel.) Thank you.

END.


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