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Panel I Of A Hearing Of The House Energy And Commerce Committee - The American Clean Energy And Security Act Of 2009

Witnesses: Lisa Jackson, Administrator, Environmental Protection Agency; Secretary Of Energy Steven Chu; Transportation Secretary Ray Lahood

Chaired By: Rep. Henry Waxman (D-CA)

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REP. WAXMAN: The committee will please come to order.

This week we begin our consideration of comprehensive energy legislation, the American Clean Energy and Security Act of 2009. Since the beginning of last Congress, this committee has been working hard on energy legislation. We held 41 days of hearings since January. We received testimony from 61 witnesses.

This week alone, we will hear from 67 more witnesses. And I want to thank all the members of the committee on both sides of the aisle for their intensive involvement on energy reform. You have made a major commitment of your time, your staffs' time, and this is crucially important to our success.

I also want to warn the members, as hard as we have been working, the pace is going to accelerate over the next four weeks. There are many issues that we need to discuss and resolve between now and Memorial Day. We will be working hard because the goals are so important.

The energy legislation we are considering will create millions of jobs, revive our economy and secure our energy independence. It will also protect our environment. In February, President Obama spoke to Congress and the nation about the need for comprehensive energy reform. He called on Congress to pass legislation that would transform our economy, protect our security and preserve our planet. Our job on this committee is to meet those goals.

We are fortunate today to have three Cabinet-level officials testifying to our committee for the first time: Energy Secretary Steven Chu, EPA Administrator Lisa Jackson and Transportation Secretary Ray LaHood. They will explain the president's objectives and how we can assure our legislation meets them.

As Chairman Markey and I worked on the draft legislation, our blueprint was a plan proposed by the U.S. Climate Action Partnership, a coalition of industry CEOs and environmental organizations. We will hear today from six leaders of USCAP: DuPont, Conoco-Phillips, Duke Energy, Alcoa, NRG, and the Natural Resources Defense Council. They will tell us how well we did translating their blueprint into legislative language. I want to thank them and all our witnesses for their participation in this hearing.

We have said that true energy reform -- some have said that true energy reform will undermine our economy. They argue that there is a fundamental conflict between economic growth and clean energy. This is a false choice. Our economic future and clean energy are inextricably intertwined. The economy that will grow the fastest in this century will be the one that makes the greatest investments in new energy technologies.

Nearly 40 years ago, this committee passed the original Clean Air Act. Since then, we have reduced dangerous air pollutants by 60 percent or more. During the same period, our population has grown by 50 percent and our economy by over 200 percent.

Twenty years ago, under the leadership of John Dingell, this committee passed the 1990 amendments to the Clean Air Act. Opponents of the legislation said that stopping acid rain would bankrupt the utility industry. In fact, we cut emissions in half at a fraction of the cost the naysayers predicted.

We have a similar opportunity and responsibility this year. The legislation we will be considering today has four titles. The clean energy title will spur investment in the technologies of the future -- clean renewable energy, electric utilities, electric vehicles and the smart grid. The energy efficiency title will reduce our dependence on foreign oil and save consumers billions of dollars by making our homes, our appliances and our transportation system more energy- efficient.

The global warming title will create a market-based system for reducing carbon emissions to safe levels. And the final title will provide our industries, our workers and American families with the support they need during the transition to a clean energy economy.

It is no longer a question whether we will act to reduce CO2 emissions. The endangerment finding released by EPA last week answers that issue. The real question is whether we will do so in a way that strengthens our economy, creates new jobs and ends our dangerous dependence on foreign oil.

These are achievable goals. But to reach them, Congress needs to act, and we on this committee need to lead the way. We can succeed, but we will need to work together to forge consensus and a workable solution. And I look forward to working with all the members of the committee as we embark on this process.

I want to recognize Mr. Barton now for opening comments he wishes to make.

REP. JOE BARTON (R-TX): Thank you, Mr. Chairman.

I want to welcome our distinguished panel of administration officials, especially Mr. LaHood, our former colleague; of course, Dr. Chu, who I had some dealings with in the laboratories; and the honorable Mrs. Jackson. We appreciate you being here.

I think it's interesting, Mr. Chairman, that we're trying to go ahead and move a bill that will reduce CO2 emissions in the United States to below 83 percent of their baseline of 2005. If you want an idea what that's like in terms of carbon footprint, you might try living in Nigeria today, because that's the emission level that they have right now. If you have a time machine, you might dial your time machine to 1875 and feel what it's like to live in America back in 1875 with a carbon footprint of approximately two and a half tons per person. I don't think most of today's citizenry in the United States would enjoy that type of a lifestyle too much.

I also think that it's interesting that a lot of people seem very determined to raise energy prices in this country. Our current president, President Obama, said during the campaign that capping carbon and trading emissions would make electricity bills necessarily skyrocket. And that's his quote -- "necessarily skyrocket."

The people that global warming is religion believe that carbon dioxide, CO2, which is naturally occurring in nature, is the devil's brew. And they apparently think that we can only achieve salvation by putting our faith in the United States federal government. Our government will offer indulgences in the form of emission permits. We will all atone for our past sins and our economy's past sins by paying through the nose with these expensive new energy carbon taxes.

It's no secret that I'm a skeptic. I don't believe that mankind is the primary cause of climate change. I do accept that CO2 levels are rising. I think it's a debatable proposition whether that's a good thing or a bad thing. But in any event, to put some sort of blind faith in a cap-and-trade system that hasn't worked anywhere in the world in terms of CO2 won't work here in the United States. And if we take it to the level of the draft bill that Mr. Waxman and Mr. Markey have put out, it will deindustrialize the United States of America in the next 40 years.

I'm not going to be a part of that. I'm just not going to do it. The dark side of economic opportunity will always be that somebody thinks they can benefit from it. And I believe that that's one reason so many U.S. companies, some of which are going to be before us later this afternoon, support the cap and trade, because they think they can benefit economically either by having allowances to sell or by trading in the allowance market.

And I understand the need to make a dollar, but I think it's a terrible thing if we're going to set up a system where the only people that benefit are the people (in the ?) trading system and the people who get these free allowances because of what they've done in the past.

Now, I understand that your draft is silent on that. And my understanding is that you and Mr. Markey have decided, at least so far, to not have free allowances. You're going to have an auction system. I hope you stick with that. I was here in the Clean Air Act amendments when we did SO2 back in the early '90s, and I remember the fights we had on base lines and I remember the fights we had on allowances for particular plants and things like that. That will be a picnic compared to what we'll have if we go down where we start trying to -- we, not me -- but you and Mr. Markey start trying to buy votes by giving allowances to this group or that group or whatever.

I think it's interesting that we don't have a score from CBO because you've not put anything out that CBO can score. So apparently, if and when we go to markup, we're going to have this miracle draft that comes forward in terms of a manager's amendment, and, lo and behold, there will be something to score, but CBO won't have time to score it.

If it's anything close to what we had last year in the Senate with the Warner-Lieberman bill, it's going to be very, very expensive. If it's close to what the Obama administration put in their budget, according to the CBO director, it's probably going to score in the neighborhood of $2 trillion negatively over an eight-year period. That's a pretty expensive package, Mr. Chairman.

If you look at where our economy is today, what the unemployment rate is today, where the stock market is today, I don't think that's a cost that we can bear.

As long as we're talking about costs, let's talk about just the straight increases in energy costs. Every, every, every estimate that I've seen Mr. Chairman says that energy costs are going to go up across the board. The electricity costs could go up somewhere between 44 (percent) to 125 percent. Gasoline costs could go up. You name the cost, it's going to go up.

How does that affect the unemployment rate? Michigan right now has an unemployment rate of 12 percent. Indiana has an unemployment rate of 10 percent, Ohio's at 9.7 (percent), California and Georgia are at 9.2 percent. Even my great state of Texas where the economy is relatively better off has got an unemployment rate over 6 percent. I mean, if energy prices go up, lots and lots of Americans are going to lose their jobs, and then that in turn is going to cause even more deficit spending on behalf of the federal government.

How is that costed into this draft? However you cost it, it's going to be a negative cost. I could go on and on Mr. Chairman but I've already gone over almost two minutes and I appreciate your indulgence. Put me down as undecided on your bill and -- (laughter) -- I look forward to hearing from our panel and then trying to work with you and Mr. Markey and members of the committee to do something that's positive.

REP. WAXMAN: Thank you Mr. Barton. Now I want to recognize the chairman of the Energy Subcommittee, Mr. Markey.

REP. EDWARD MARKEY (D-MA): Thank you, Mr. Chairman very much. And first I want to thank Secretary LaHood, Secretary Chu and Administrator Jackson for being with us here today.

The presence of this all star line up is a testament to the priority that the Obama administration places on developing sound energy legislation and fighting global warming. Today, Earth Day 2009, we begin the process of writing history as we work to pass new energy legislation that will revitalize our economy, enhance our energy security, create millions of new jobs and end the global warming crisis.

We arrive at this crucial moment with much at stake and not a moment to spare. Winston Churchill once said courage is what it takes to stand up and speak. Courage is also what it takes to sit down and listen. In the days ahead, we will need to have both the courage to speak out and the courage to sit down and listen. If we do that, we can pass legislation that will create millions of new jobs and reduce our dependence on foreign oil, all in a way that meets our environmental and economic needs.

We have reached a crossroads where inaction is simply not an option. Our economy cannot continue to depend heavily on foreign oil. Our energy system cannot continue to be highly inefficient. We cannot continue energy policies that look to last century's energy sources while other nations race ahead to take the lead in developing and marketing clean energy technologies and green jobs.

Germany's second largest export after cars is wind turbines. China is becoming the leader in renewable energy. Japan and Korea are leapfrogging America in advanced vehicle technology. Nor can we pretend that business as usual has shielded us from harmful negative changes in our economy or from increases in energy prices. It has not. Attempts to seek refuge in the status quo have left us further behind in the ongoing global economic and energy race.

Those who predict our bill will result in soaring energy costs fall into a long line of doomsayers who have eventually been proven wrong. Environmental statutes have saved lives and smart energy policies have saved money and done so at a fraction of the high cost projected by industry. Nor will global warming or oil driven foreign regimes wait for us to act.

Just last Friday, Administrator Jackson issued her proposed endangerment finding stating that climate change is an enormous problem and, quote, "the greenhouse gases that are responsible for it endanger public health and welfare". Among the impacts that flow from global warming are increased drought, more frequent and intense heat waves and wild fires and harm to water resources, agriculture, wildlife and ecosystems.

And EPA also emphasized that global warming will have disproportionate impacts on the very poor, the very young, the elderly, those already in poor health and those living alone or dependant on few resources. Left unabated, global warming and our dependence on oil will jeopardize America's national security and increase our economic risk. Whether it is in the hundreds of billions we send every year to unfriendly regimes or the hundreds of millions globally who could be without drinking water from increased drought, we cannot wish away these problems.

Chairman Waxman and I have developed our discussion draft with all of these factors in mind. In the discussion draft, and going forward, Chairman Waxman and I will strive to get reductions in global warming pollution that meets science based targets by using cost saving energy efficiency and clean energy solutions. We will continue to develop strategies to help keep costs low from the use of offsets to banking and borrowing and through the use of a strategic reserve of allowances that can limit any costs that are higher than expected.

We will continue to fund clean energy solutions that will allow new American companies to prosper creating clean energy jobs that can't be shipped overseas, and we will continue to provide opportunities and incentives for energy efficiency to save families money. We will continue to ensure that we assist and benefit consumers, especially low income consumers. We will ensure that our most internationally competitive industries are not left exposed to foreign inaction. And we will hold ourselves to high standards and we will hold the international community to high standards. Nor are we finished improving this legislation.

As we proceed through these hearings, we will hear dozens of other witnesses, some with positive comments and some with suggestions for improvements. We welcome these comments and we look forward to working with all the members of this committee to develop legislation that will create a new, clean energy economy free of the threat of dangerous global warming and free of our dependence on foreign energy sources.

Thank you Mr. Chairman.

REP. WAXMAN: Thank you Mr. Markey. Now I wish to recognize for an opening statement the Ranking Member of the Energy Subcommittee Mr. Upton.

REP. FRED UPTON (D-MI): Thank you, Mr. Chairman and before I begin my opening statement, I'd like to submit a number of articles for the record.

First of all, from last week's Washington Post, India rejects calls for emission cuts with regards to the president's push to combat climate change, Indiana officials said it was unlikely to prompt them to agree to binding emission cuts.

From the New York Times, thirsty for energy in India's boomtown and beyond, a quote, "almost half of India's population has no access to the electricity grid. About 700 million Indians rely on animal waste and firewood as fuel for cooking."

From the Saginaw News, terrible time for higher bills, quote, "as a result of the recent green mandate sticking people with an average of $125 utility bill increase, seems kind of cruel in a state that's suffering 12-and-a-half percent unemployment.

From the Detroit News, cap and trade plan will hit the heartland with a quote, "cap and trade system is a giant economic dagger aimed at the nation's heartland, particularly Michigan."

From the Hill, Not all senators warming to Obama cap and trade. Sherrod Brown the former member of this Committee Obama's plan would lead to an increased energy cost and would drive American firms abroad.

From the Wall Street Journal, who pays for cap and trade with a quote, "an economy-wide tax under the cover of saving the environment is the best political money maker since the income tax."

And from U.S. News and World Report, the next Bernie Madoff emissions cap and trade aids the corrupt, hurts the little guy, and on and on.

I would like in advance to thank the 60-some witnesses who will be testifying before our committee this week and due to the limited time I would like to submit the following four questions to each of our witnesses and would ask them to address these during their opening remarks.

Number one, will the legislation increase energy costs? If so, is there anything in the underlying bill that prevents these costs from being passed on to consumers?

Two, since the legislation applies only to the U.S. but not other nations like China, India, and Mexico, is there a chance it will result in American jobs being shipped overseas and how many jobs will be lost?

Three, what was the cumulative cost per household of this legislation?

And four, absent other nations adopting the same reduction policy, how much will the legislation actually reduce global temperatures, if at all?

I do believe that we need to reduce emissions, but we must do it in a common sense way that takes into account the economic and global realities of the issue. This week was reported in the New York Times that China discovered 180 miles of the Great Wall that they didn't know existed. How on earth are they going to be able to monitor and reduce their greenhouse gas emissions?

And I wonder, how many coal-fired plants that they might have discovered in the last couple of years as they were analyzing this new 180 miles?

We're not engaged in a guessing game. We have the luxury of examining empirical evidence of past forays into different policies. All one has to do is to examine the results of the EU's cap-and-tax scheme. It was a failure. CO2 emissions in the U.S. fell by 1.8 percent in '06 compared to a .3 percent increase in emissions in the EU, according to the EIA. Both economies grew at near-identical pace in 2006 of about 3 percent. Cap and tax, cap and trade will essentially kick working families when they're down. And if we thought the American public was angry at $4.25 gas prices last summer, just wait until they get their hands on their utility bills under cap and tax.

In '08, approximately 21 percent of all utility accounts were overdue, with folks carrying past-due balances on average of $160 on electric bill and $360 for natural gas. And in Michigan, the account debt totaled $367 million with one out of three behind on their bills in some of our areas. Times are tough, yet this proposal puts a bulls eye on the back of working families who are struggling to feed their families, to keep the lights on.

In fact, in Michigan, it came out just yesterday that we have lost 150,000 jobs in four months. And it's expected that, according to the University of Michigan, we're going to lose 239,000 jobs in '09. We're one of the hardest hit in this weak economy, and we would be disproportionately impacted with this legislation. NAM did a detailed analysis of the impact on Michigan. And quite simply, jobs are going to be lost, electric prices are going to up and household incomes will be decimated, and any growth will absolutely disappear.

Let's put the scale of emissions reductions called for into perspective. Current proposals would mean that the U.S. cannot emit more in the year 2050 than we emitted in 1910. That's a pretty daunting task considering that in 1910 the U.S. had only 92 million people compared to about 420 million expected in 2050. And to reach the lofty goal of 80 percent reductions, emissions from the entire transportation sector would have to drop to zero. Emissions from all electricity generation would have to drop to zero. And then we'd need to reduce everything else by 50 percent.

Climate change is a serious problem that necessitates serious solutions. But how can we address such a serious issue without nuclear even being addressed in this measure, even though nuclear power accounts for 70 percent of our nation's emission-free electricity? We are in desperate need of a reality check. Without international participation, jobs in emissions will simply shift overseas to countries that require few if any environmental protections, harming the global environment as well as the U.S. economy. If our objective is to send manufacturing jobs overseas, destroy the Midwest, mortgage our future and hand the keys over to our superpower status, then I would say, job well done. This bill does it.

The stakes are high, the planet is warming, and this is no time to throw in the towel all in the name of cap and tax. So I guess, Mr. Chairman, you can put my name as undecided with Mr. Barton. I yield back.

REP. WAXMAN: Thank you very much, Mr. Upton.

We're pleased to welcome three representatives from the Obama administration, Secretary LaHood, Secretary Chu and Administrator Jackson. Your prepared statements will be in the record in full. And we would like to recognize each of you to make an opening statement. And we will have a clock that will indicate five minutes. When you see the red light on, we would like you to recognize your time is up and to summarize so we'll have plenty of time for questions and answers by members of the committee.

Administrator Jackson, we'd like to start with you.

MS. JACKSON: Thank you. Thank you, Chairman Waxman, Chairman Emeritus Dingell, Ranking Member (and honorary member ?) Barton, Congressman Markey, Congressman Upton and members of the committee. Thank you for inviting me to testify about the draft American Clean Energy and Security Act. And happy Earth Day to each and every one of you.

Let me begin by commending this committee for embarking on the serious, difficult and essential work of passing comprehensive, detailed energy legislation and moving it through an open and careful process in which representatives hold hearings, make amendments and cast votes.

When President Obama was inaugurated 92 days ago, the United States found itself in the worst economic crisis since the Great Depression. So the president worked with Congress to pass the American Recovery and Reinvestment Act. That law is now creating good jobs for Americans. Thanks to the act, EPA is putting Americans to work, overhauling clean water systems, restoring and redeveloping polluted properties, installing clean-air equipment on diesel engines and cleaning up leaking underground fuel tanks.

The American Recovery and Reinvestment Act also injected an essential shot of adrenaline into the American energy sector. That immediate relief is essential to economic recovery. But President Obama has also leveled with the American people. Lasting economic recovery will come only when the federal government looks beyond the quick fix and invests in building the advanced energy industries that will help restore America's economic health over the long term.

So President Obama has called on Congress to pass forward-looking energy legislation. That legislation should create here in America millions of the clean-energy jobs that cannot be shipped overseas. It should catapult American innovators past the foreign competitors who, due to aggressive investments by their governments, now enjoy a headstart in the advanced energy technologies that represent the new Internet revolution, the new biotech wave. The legislation should reduce our dependence on oil and strengthen America's energy security, and it should start in a real and tangible way to tackle greenhouse gas pollution which threatens to leave to our children and grandchildren a diminished, less-prosperous, less-secure world.

Three weeks ago, Chairmen Waxman and Markey released draft legislation that strives to accomplish the goals I just listed. The American Clean Energy and Security Act would introduce a clean-energy requirement for American electric utilities and new energy-efficiency programs for American buildings. Those initiatives aim to create good American jobs that cannot be shipped overseas.

The legislation would launch programs to promote electric vehicles and deploy technologies for capturing, pipelining and geologically storing carbon dioxide produced at coal-fuel-powered plants. Those incentives aim to help American companies make up for lost time in the advanced energy industries that will be to the 2010s what Internet software was to the 1990s. The legislation would institute new low-carbon requirements for vehicles and fuels as well as programs to reduce vehicle miles traveled. Those proposals aim to increase America's energy security and cut back on the hundreds of billions of dollars that America throws away every year on oil.

And the legislation will put in place a declining cap on greenhouse gas pollution. That market-based system aims to protect our children and grandchildren from severe environmental and economic harm and from great threats to our national security while further invigorating advanced American energy industries.

The American Clean Energy and Security Act draws on the thoughtful legislation that Chairman Emeritus Dingell and Congressman Boucher drafted last October, and it tracks many of the recommendations put forward by the U.S. Climate Action Partnership, a coalition that includes American manufacturers such as Alcoa, John Deere, Caterpillar, Dow, Ford, General Motors and General Electric.

Now, the no-we-can't crowd will spin out doomsday scenarios about runaway costs. I do not claim that we can get something for nothing. But EPA's preliminary economic modeling indicates that the investments Americans would make to implement cap-and-trade program in the American Clean Energy and Security Act would be very modest compared to the benefits that science and plain commonsense tell us a comprehensive energy and climate policy will deliver.

I ask the members of this committee to recall the acid rain trading program drafted by this committee as amendments to the Clean Air Act and signed by a Republican president in 1990. Beltway corporate lobbyists insisted that the law would cause, and I quote, "death for businesses across the country." But as the members of this committee who worked hard on that legislation know well, it ended up delivering annual health and welfare benefits of over $120 billion at an annual cost of only $3 billion. Our economy grew, and acid rain was cut by more than 50 percent.

The Clean Air Act amendments dealt with controversial issues, not just acid rain, but small, hazardous air pollutants and the threats to the ozone layer. But once Chairman Dingell and Chairman Waxman joined forces with other members of this committee to find consensus, the committee reported the amendments favorably to the full House by a vote of 42 to 1. I believe this committee can make history again this year. And the draft American Clean Energy and Security Act is a great start. It reflects the president's priorities of reducing our dependence on oil, creating millions of new jobs by leveraging America's tremendous capacity for innovation and significantly reducing greenhouse gas pollutions.

This administration wants to see this effort move forward, and I pledge to work with this committee over the weeks ahead to help you find consensus. Thank you. I look forward to answering the member's questions.

REP. WAXMAN: Thank you, Administrator Jackson.

Secretary Chu, we'd like to hear from you.

SEC. CHU: Chairman Waxman and Markey, Chairman Emeritus Dingell, Ranking Members Barton and Upton and members of the committee, thank you for the opportunity to appear before you today to discuss the American Clean Energy and Security Act.

For decades, our energy strategy has been literally no strategy at all. For our transportation needs, we have become increasingly addicted to oil at escalating costs to our economy, our environment, our security. For our electricity needs, we burn immense amounts of coal which is cheap and abundant but a major contributor to global warming. We will continue to use coal as a fuel, but we must learn to do it in a cleaner way.

On this Earth Day, we must state in no uncertain terms we have a responsibility to our children and their children to curb carbon emissions from fossil fuels that have begun to change our climate.

President Obama recognizes that the energy challenge is the defining challenge of our time and he is committed to a comprehensive energy plan that creates jobs, reduces our greenhouse gas emissions and reduces our dependence on oil.

The Energy Independence and Security Act and the American Recovery and Reinvestment Act have made a down payment on clean energy's future. I'm pleased to report that the Department of Energy is getting the recovery act money into your local communities as quickly as possible while maintaining the highest standards of transparency and accountability.

We are already putting Americans to work making homes and buildings more efficient, which will grow our economy and cut energy bills for families. The recovery act also provides financing options that could double the production of renewable energy and expand investments in the development of breakthrough energy technologies, but we need to do more.

We need not only to jumpstart our economy today, but to lay the foundations for America's long-term prosperity. In the years ahead, the world will turn increasingly to unconventional sources of petroleum, which could lead to higher prices to consumers. With these rising energy costs and the mounting challenges of our climate, the development of clean, renewable sources of energy will be the growth industry of the 21st century.

The key question is who will lead the world in making energy- efficient vehicles, wind turbines, solar panels and other products and technologies that will power tomorrow's economy? There are two dangers, either of which could dramatically weaken America's future.

The first is that the world will fail to take action on climate in time to prevent the worst potential affects. The second is that the United States will fail to seize the opportunity to lead and the new clean energy jobs will be created overseas rather than in America. We can neither let our planet get too hot or let our economy grow too cold. We must get off the sidelines of the clean energy race and play to win.

To that end, we in the administration appreciate Congress's effort in developing the clean -- American Clean Energy and Security Act. While we're still reviewing the details, it is clear that Chairman Waxman's legislation could advance the president's goals of launching a new sector of clean energy jobs, making our economy more competitive and weaning the nation from its dependence on oil. The president looks forward to working with members of Congress in both chambers to pass a bill that would transition the nation to a clean energy economy.

The administration believes that a gradual market-based cap on carbon pollution would also be a significant step toward restoring America's leadership in the deployment of clean energy technology. Building on the success of the bipartisan acid rain program created in 1990 -- the Clean Air Act -- this approach will set a clear long-term emission goals that empower the private sector to find the most innovative ways to reduce carbon pollution.

The administration also believes a renewable electricity standard could help create a stable investment environment for America's innovators to do what they do best: create new jobs and entire new industries. We also believe that it is important to foster continued development of critical technologies to give the American people advanced clean vehicles, to capture and store carbon to eliminate emissions and sustain our environment, to accelerate energy efficiency improvements and to develop a smart grid to improve the efficiency, reliability and security of our electricity transmission system.

I applaud Chairman Waxman and Markey for bringing this bill forward. Now is the time to take comprehensive and sustained action to meet our energy -- nation's energy challenge. With the leadership of the president, the actions of this Congress, and the support and participation of the American people, I am confident we will succeed.

Thank you and I'd be glad to answer your questions.

REP. WAXMAN: Thank you very much, Secretary Chu.

Secretary LaHood.

SEC. LAHOOD: Mr. Chairman, Mr. Markey, Mr. Dingell and Mr. Barton -- and friends all -- thank you for inviting me to discuss the Department of Transportation's commitment to promote a cleaner, greener America through effective and innovative transportation policy.

I appreciate the opportunity to discuss the important environment and energy policies laid out in the American Clean Energy and Security Act. I commend the committee for drafting this important legislation.

Since today is Earth Day, this is an excellent time to hold a serious national conversation on the most effective ways to improve energy efficiency, reduce greenhouse gas emissions and mitigate the impact of climate change.

As you know, one of the highest priorities of President Obama's administration is to develop a comprehensive energy plan that will not only achieve these goals, but also create millions of good paying, clean energy jobs and help our communities become more livable in the process.

There's no question that the United States must be the leader in the global effort to address climate change, cut pollution and find more sustainable ways to keep our society mobile. The president has already taken concrete steps in this direction.

The administration has proposed new fuel-efficiency standards for cars and light trucks that would significantly reduce emissions and save millions of gallons of fuel beginning in model year 2011. And we are coordinating with the Environmental Protection Agency and the Department of Energy on new fuel economy standards to take us through 2016.

Our department is also using new statutory authority to explore new fuel economy standards for medium and heavy-duty trucks. Additionally, the department continues to invest in busses run on alternative fuels, thereby reducing emissions and improving air quality in cities and towns across America.

Our commitment has helped to quadruple the number of clean-fuel bus fleets across and around the nation since 1998. Through the Recovery Act, we are making $100 million grants in grant funds available to help the transit industry to improve fuel efficiency and reduce emissions for bus, railcars and other transit equipment.

On the climate change front, over the last several years we've invested in research and technology efforts that will help us to transition away from fossil fuels, improve vehicle efficiency and optimize our transportation network to reduce congestion and idling, while contributing to higher emission levels.

Across the department, we are committed to programs and policies that address our environmental concerns. The FAA, for instance, is working with the private sector on sustainable alternative fuel for aircraft; the Maritime Administration exploring new technologies in cooperation with EPA and industries to reduce emissions from marine diesel engines.

Looking ahead, the Department of Transportation stands ready to meet the president's ambitious goals for making transportation an integral part of our approach to address environmental challenges. In the coming months, we will work with stakeholder groups around the country to determine how best to invest $8 billion in new funding for high-speed passenger rail service that will ultimately improve mobility and reduce congestion.

And we will work closely with Congress to develop a new surface transportation bill that focuses on reducing greenhouse gas emissions by investing in green transportation choices such as bike paths, pedestrian walkways, building more housing -- and building more affordable housing near transit.

In closing, the Department of Transportation will continue to be your full partner as we move forward with new legislation to help America address its formidable energy challenges.

I look forward to working with you, Mr. Chairman, and the entire committee.

REP. WAXMAN: Thank you very much, Secretary LaHood.

We'll now recognize members for questions -- five-minute rounds -- and I'll start off.

The three of you gave us testimony on behalf of the administration and I thank you for your presentations.

Our nation is facing some very difficult energy challenges and we have ignored them for too long. We're overly dependent on foreign sources of oil, our economy is in a recession, we are no longer leading in the development of clean energy technology and we're polluting our environment.

President Obama is trying to confront these problems. He has said we need a comprehensive energy policy that creates new clean energy jobs, promotes energy independence and tackles the tremendous threat of global warming.

Chairman Markey and I tried to draft a discussion proposal that addresses these three issues. And what I want to ask you is whether you think our draft accomplishes the president's goals.

Let me begin by asking you about jobs and our economy: Americans are hurting -- and this is the first question on most of our minds.

Administrator Jackson, do you believe the bill would create jobs here in the U.S. and stimulate economic growth?

MS. JACKSON: I do indeed, Mr. Chairman. I believe this is a jobs bill and it is a jobs bill that focuses our country's attention on the growth industry of the future, which is the clean energy industry.

There are opportunities here for us to create literally millions of jobs in the clean energy --

REP. WAXMAN: Could you move the microphone a little closer? Some of the members are complaining about not being able to hear.

Secretary Chu, do you agree -- would this bill put us on a path toward a clean energy economy?

SEC. CHU: I absolutely agree with that.

I think, as you yourself noted, the world has rapidly changed its attitude towards carbon emissions and is continuing to do so. So in a future world, it is very clear that we will be living in a carbon- constrained world. So the action will be: How do you transition to a sustainable energy future?

The United States must position itself in a way so that we can lead this transition; that we take advantage of the full intellectual opportunities and vigor of this country to develop those technologies that will add to our economic prosperity.

REP. WAXMAN: And Secretary LaHood, what do you think about the creation of jobs and helping our economy with the Obama proposal?

SEC. LAHOOD: Well, Mr. Chairman, I think that nothing has taken as much time for this administration than trying to get the economy going. This is the number one priority for this administration, and I know it is for Congress also. And I know that's why Congress passed the Economic Recovery Act, which many of us in this administration are implementing to try and get our fellow Americans back to work. And we're certainly doing that at the department. I believe that the work that you are all doing, the bill that you have laid out, will go a long way to creating jobs, and particularly I want to note, green jobs. And in the area that we work in the Department of Transportation, we believe there will be a number of green job opportunities created around the country, as a result of the approach that's being taken by your legislation. And this is the reason that we're here today.

REP. WAXMAN: Let me ask you this, though. The other objective, one of the other objectives, is to reduce our dependence on foreign oil. Americans are tired of sending billions and billions of dollars overseas for oil. And many countries -- to many countries with hostile governments. Do you believe this bill will reduce our dependence on foreign oil?

SEC. LAHOOD: Absolutely. I think it sets the bar very high, and obviously one of the concerns that all of us in public policy positions have faced, is the ire of the public when a barrel of oil goes up and gasoline goes up, and people are not able to use their automobiles. And I think this approach will help -- the approach that you're taking in your legislation, will relieve our dependence on foreign oil, by creating other opportunities for people, certainly in the area of transportation.

REP. WAXMAN: Thank you very much. And I assume, Secretary Chu, and administrator Jackson, you agree this will reduce our dependence on foreign oil, as well.

SEC. CHU: Yes. I do.

REP. WAXMAN: The third goal of this discussion draft is to effectively address the danger of global warming. We want to craft legislation based on science. And that means a bill that makes the global warming pollution reduction scientists tell us are necessary to avoid catastrophic climate change. Secretary Chu, does this bill represent an effective response to the threat of global warming? Does it take the necessary steps at home to insure that America can restore global leadership in this issue?

SEC. CHU: It does.

REP. WAXMAN: And do the other two of you agree with that position? Administrator Jackson?

MS. JACKSON: Yes, I certainly do, Mr. Chairman. This bill includes strong targets, and it moves us to adjusting global warming pollution by establishment of a cap and trade program, which I think many businesses agree is the way to harness private investment and capital into -- on our side, in reducing pollution and creating the green energy economy.

REP. WAXMAN: Thank you very much. My time is expired. Do you want to add anything, Secretary LaHood?

SEC. LAHOOD: I agree.

REP. WAXMAN: Okay. Good. Mr. Barton.

REP. BARTON: Thank you, Mr. Chairman. Before I begin my questions, I want to commend you and Mr. Markey on one thing I didn't in my opening statement. We have had intense debates about the number of Republican witnesses versus Democrat witnesses at these hearings. In this case, I want to commend you on your administration panel, you went out of your way to make sure we had a Republican witness, and we didn't even have to ask. So I should have commended you for that, so we appreciate you doing that.

REP. WAXMAN: You can commend the American people for that.

REP. BARTON: Very good, thank you, and the President for appointing you.

Administrator Jackson, your agency, yesterday, came up with an economic impact analysis of the pending draft. How were you able to do that, since the most important economic component of the draft has no allocation cost scheme in it?

MS. JACKSON: At the request of the drafters, we did indeed release economic modeling. And in order to do it, we had to make assumptions about how allowance revenue would be distributed. At the request of the drafters, those assumptions were put into the modeling.

REP. BARTON: Is that -- I haven't seen the analysis, but are those economic assumptions and allowances costs, are those public?

MS. JACKSON: Yes, they are, and the modeling is public.

REP. BARTON: They're public. Thank you. Your agency also recently came up with a finding that CO2 is hazardous to health, and therefore should be regulated under the Clean Air Act. Just what is the health hazard, since CO2 itself is not a pollutant?

MS. JACKSON: Well, the proposed finding would classify CO2 as a criteria pollutant. And the health impact associated with CO2, especially for the very young, and for the elderly, are exacerbation of other impacts from pollutions. CO2 acts to make impacts from pollution worse, because the CO2 and the warming that it causes, the climate change, is actually --

REP. BARTON: But inhaling CO2, and being exposed to CO2, in and of itself, is not a health hazard.

MS. JACKSON: Well, right. Well, CO2, in the absence of oxygen --

REP. BARTON: You're creating CO2 as you talk to me.

MS. JACKSON: I think I understand your question, sir, which is if you inhale only CO2, certainly that would make you sick. You wouldn't live without oxygen. But the CO2 and the endangerment finding is based on scientific analysis of CO2 and five other greenhouse gases and their impact on the welfare of our country and then human health, because of --

REP. BARTON: Do we have examples in your finding of CO2 pollution causing death or large illnesses? I mean, we know SO2 and we know mercury and we know lead, we know that criteria pollutants, even ozone causes asthma or can exacerbate asthma. We don't have that with CO2.

MS. JACKSON: But the finding -- the proposal answers the question put to us by the law, and by the Supreme Court, which is, do these greenhouse gases as a class endanger public health and welfare? And the finding is based on an analysis of what the greenhouse gases do, first to our environment and our planet, and what that means for human health.

REP. BARTON: Okay. Well, I thank you for those answers. Mr. LaHood, or Secretary LaHood, former chairman Dingell in his opening statement yesterday talked about the need for specific funding for the automotive industry, and some assistance in terms of meeting their emission requirements under legislation that was passed last year. Have you looked at former chairman Dingell's comments? And if so, do you support some of the things that he said yesterday?

SEC. LAHOOD: I'm sorry. I have not seen his testimony. I mean, I'd be happy to look at it, but I haven't seen it.

REP. BARTON: He was specifically saying that there should be a specific funding source in this bill to help the automotive industry meet the requirements in terms of their emission improvements that they have to meet. And he also said that for re-tooling issues and things that there should be additional funding. So you might just --

SEC. LAHOOD: You mean the bill that's under consideration here by the committee?

REP. BARTON: Yes, if I understood him correctly, that's what --

SEC. LAHOOD: Well, to be honest with you, Mr. Barton, I haven't thought about that. But I would say this. I don't know of another administration, or another Congress that has done more for the American automobile manufacturer, than the Obama administration and this Congress in the economic stimulus bill. And also last year, in what Congress did, in terms of the money available to the American automobile manufacturers. This administration is committed --

REP. BARTON: I'm one -- You don't have to convince me, Mr. Secretary. I'm one of the Republicans who voted for the auto package, so you don't have to --

SEC. LAHOOD: No, if you're asking me if we're committed to helping the American automobile manufacturer, the answer is "yes, we have", and I believe the President will continue --

REP. BARTON: I'm specifically asking just to take a look at what Mr. Dingell said, and give a report.

SEC. LAHOOD: I didn't see his testimony, but I'd be happy to look at it.

REP. BARTON: Alright. Dr. Chu, I don't want to leave you out. You're our scientist. I have one simple question for you in the last six seconds. How did all the oil and gas get to Alaska and under the Arctic Ocean?

SEC. CHU: This is a complicated story, but oil and gas is a result of hundreds of millions of years of geology, and in that time, also the plates have moved around. And so it's the combination of where the sources of the oil and gas are --

REP. BARTON: I mean, isn't it obvious that at one time, it was a lot warmer in Alaska, and on the North Pole? It wasn't a big pipeline that we created in Texas, and shipped it up there and then put it underground, so we can now pump it out and ship it back.

SEC. CHU: No, there are continental plates that have been drifting around throughout the geological ages --

REP. BARTON: So it just drifted up there --

SEC. CHU: That's certainly what happened. And so, it's a result of things like that.

REP. WAXMAN: The gentleman's time has expired.

REP. BARTON: Thank you, Mr. Chairman.

REP. WAXMAN: Mr. Markey?

REP. ED MARKEY (D-MA): Thank you, Mr. Chairman, very much. Secretary Chu, I know you have spent a lot of time thinking about new energy technologies. Are you concerned that we could lose our leadership in new energy technologies to other countries?

SEC. CHU: I am very concerned of that. It actually tears my heart out to see what has happened. If you consider what happened, photovoltaics were invented by Bell Labs in the 1930s. We are not a leading manufacturers of silicon photovoltaics.

Wind turbines, which were first deployed in the United States in the first energy crisis of the mid-1970s, that was -- that had gone overseas to Denmark, to Germany. Nuclear reactors, which we pioneered -- now Westinghouse, there's a major shareholder and Westinghouse is now owned by a company in Japan.

I am very concerned. The major power electronics of the world has drifted overseas. It's in Europe and it's in Asia. And so I see, step by step, us losing the technology lead. We need to bring those high technology jobs back, manufacturing jobs back to the United States. This bill will help that.

REP. MARKEY: Thank you, Mr. Secretary.

During the presidential campaign now-President Obama pledged that the United States could actually deploy 25 percent of our electricity from renewable resources by the year 2025, which would be a revolution in the way in which we generate electricity in our country. Do you agree with that assessment, that we can reach that goal by the year 2025, Mr. Secretary?

SEC. CHU: Yes, I do. I think when the American public and especially the science and technology -- (inaudible) -- in the United States gets going, it can really move. And so, although it might seem like an ambitious goal, I think with the proper incentives we can get there.

REP. MARKEY: Could I ask you, Secretary LaHood, what role do you think that new advanced automotive technologies can play in revitalizing the American economy?

SEC. LAHOOD: Well, we know from visiting with the automobile manufacturers that the kind of technology that they are developing, in terms of hybrids, in terms of battery-powered automobiles, and then the standard that we have asked them to meet in terms of CAFÉ standards, are going to allow the American people to have many, many choices in the future for opportunities to have automobiles that will emit far less CO2.

And certainly the case is true with hybrids. And the further development of that -- there's a couple of automobile, American automobile manufacturers that are developing, you know, an all-battery automobile. And obviously that is going to go a long way to enhance our opportunities to --

REP. MARKEY: Are you an optimist, Mr. Secretary, that if we continue to invest in these new technologies --

SEC. LAHOOD: Look, I --

REP. MARKEY: -- as an American strategy that we can meet these goals?

SEC. LAHOOD: -- I think the American automobile manufacturers have gotten the message -- they need to get where the American people are. And the American people are ready to drive automobiles that get good gas mileage -- in the instance of those that use gasoline.

But, if the development of hybrids and battery-powered automobiles come on to the -- opportunities for people, and are allowed to be developed, I think the American people are ready for that.

REP. MARKEY: Thank you, Mr. Secretary.

Administrator Jackson, you've had a chance to look at the Waxman- Markey draft, could you tell us, in your opinion, how that legislation could help to reduce our use of oil, our dependence on imported oil in the United States?

MS. JACKSON: Well, the bill, as you drafted it, is comprehensive in that it has several opportunities for advancing renewable energy, energy efficiency. We just heard about the opportunity to put forward electric cars, a low-carbon fuel standard. And all of those things, along with especially the energy efficiency -- which is such low- hanging fruit right now for our country, and which could start tomorrow in reducing our dependence.

And then the longer-term options, as we move towards a lower carbon future through a cap-and-trade program, all of those are drivers that will push us towards using less foreign oil right now, as it makes us vulnerable.

REP. MARKEY: We produce 8 million barrels of oil in the United States. We import 13 million barrels of oil a day. That is our weakness.

We thank each of you for your leadership in helping us to address that question.

Thank you, Mr. Chairman.

REP. WAXMAN: Thank you, Mr. Markey.

Mr. Upton?

REP. UPTON: Thank you, Mr. Chairman.

I'd first like to ask Secretary Chu, Secretary Chu, the loan guarantees for nuclear are certainly, as many of us know, an essential part for building new projects such as nuclear -- new nuclear reactors. We know that you have proposed a revision to the DOE Loan Guarantee Program, but, as I understand it, OMB is not satisfied and has rejected the proposed change.

In spite of that, can you comment on what we need to improve the program?

MR. CHU: Yes. As you know --

REP. UPTON: And I don't know if only -- is that a final resolution?

SEC. CHU: No. I believe that nuclear power has to be part of the energy mix in this century. I've stated that many times. That continues to --

REP. UPTON: That will be my follow-up question, but go ahead.

SEC. CHU: And so we're certainly moving as aggressively as we possibly can. We're going to work out the differences with OMB to try to get those initial loan guarantees going.

We are also using our budget of 2008-2009 and going to 2010, we're helping getting the NRC licenses, particularly the AP-1000, so its generic design can be licensed. That's being done with the aid of the Department of Energy.

We fully intend to use the resources at the Department of Energy to further develop nuclear technology. This is one of the areas of technology that the United States should recapture its leadership in.

REP. UPTON: During your confirmation I was heartened when you said nuclear is going to be part of our energy future. It has to be.

And yet you had a statement a couple weeks later, as it related to Yucca Mountain. As you know, there is no nuclear title, as part of this bill. And I just want to know -- as you indicate now, that nuclear needs to be part of the equation, would the administration support a nuclear title to this bill knowing that there is no greenhouse gas emissions? And, what are we going to do about Yucca?

And, lastly, would you support reversing the President Carter decision on recycling, something that our subcommittee actually visited last year as we saw the French begin to -- they've done it for now a number of decades, recycle the nuclear waste. It's my understanding that both Japan and the British are doing it as well. What are your comments in that regard?

SEC. CHU: So, what we're planning to do is to appoint a blue- ribbon panel to step back and take a fresh new look at how we are going to -- a comprehensive plan of how we're going to deal with the nuclear waste.

A lot has happened since the beginning of Yucca Mountain, some 25, 30 years ago. And so, without prejudging what these blue-ribbon panel is going to find, I think it's an opportunity to actually develop a much more comprehensive and forward-looking plan. The fact that we're doing this, (I see ?), in no way conflicts with my vision of trying to move the nuclear industry forward, to restart the American nuclear industry. We can, and will, develop a comprehensive nuclear waste plan.

Now, with regard to the recycling issue, I think it's becoming increasingly apparent, even to France and Japan, that the current recycling technology used today, which isolates plutonium, has proliferation issues -- serious proliferation issues. So, what I intend to do is to start a diverse research and development program to look for ways to close the fuel cycle -- to actually recycle, but in a way that's proliferation resistant.

So, I think it's premature to start to build power plants today because we simply don't have those processes today. But, in the long term I think that's the goal.

REP. UPTON: Well, as we begin to embark on this legislation, would the administration support that a nuclear title, knowing that there is no greenhouse -- a nuclear title to this bill, which it does not currently have now, to encourage the development and forward movement of additional new reactors?

SEC. CHU: I think the administration has supported this. We are trying to, as I said, restart the American nuclear industry again. It should be --

REP. UPTON: So, it ought to be, yes.

(Cross talk.) REP. UPTON: We (look forward to ?) --

SEC. CHU: Yes. The answer is yes.

REP. UPTON: -- (inaudible) -- Okay, good.

SEC. CHU: (Laughs.)

REP. UPTON: Administrator Jackson, last year -- I believe it was last year, in testimony before our committee, your predecessors indicated that the Lieberman-Warner bill, had it passed the Senate, would really not change the -- as long as other countries were not participating, India and China, the largest emitters, they didn't participate -- that the global temperature would change by a miniscule amount, less than one degree.

Do you concur with that same thought now that we have a change in administration?

MS. JACKSON: I certainly concur with the concept, which is that global warming --

(Cross talk.)

REP. UPTON: Nothing happens without India and China?

MS. JACKSON: That international leadership is -- international action is needed to solve entirety of the problem -- yes.

REP. WAXMAN: The gentleman's time has expired.

The chair wishes to recognize the chairman emeritus of this committee, Mr. Dingell, under whose leadership as chairman we passed the last revisions to the Clean Air Act with a vote of 42 to 1. I'm hopeful we could get to 42 to 1, or that kind of a margin, this time around. But, I have my suspicions, given some of the opening statements, that we may not be able to succeed as you had in the last go-around on the most important environmental legislation that we had passed.

Mr. Dingell is recognized for five minutes.

REP. DINGELL: Mr. Chairman, thank you for your courtesy. Thank you for those kind comments. I intend to try to work with you to see to it we get a good bill out of here. And I want to commend you for the legislation that you have brought forward.

Welcome to our panel, and particularly our old friend Ray LaHood. Welcome back, Ray.

These questions are for Secretary Chu. How many applications for the Section 136 Advanced Technology Vehicles Manufacturing Incentive Programs has the Department received?

SEC. CHU: Actually, the exact number I can't really say.

REP. DINGELL: Would you submit that for the record, please?

SEC. CHU: Yes.

REP. DINGELL: The current authorization for Section 136 is $25 billion. What is the total amount that has been requested?

SEC. CHU: Well in excess of that amount.

REP. DINGELL: Would you give us the exact figure? And Mr. Chairman, I ask unanimous consent that I be permitted to write a letter to the departments asking to expand upon the questions that I'm making now and that both that letter and the response be included in the record of the committee.

REP. WAXMAN: Without objection, that will be the order.

REP. DINGELL: Mr. Secretary, this goes to both you and my old friend Secretary LaHood. This country has had a wonderful experience. The new Chevy Vault is driven out of the factory on electric power, and that wonderful vehicle was driven out on batteries that were made in Korea. Now we've had a policy in this country that's gone in effect and gone in and out like Murphy's glass eye. Each new administration comes in with a new package to stimulate new technology in the auto industry, and so we have a constant replacement of these programs, and they never work because they never get a chance to. What do you think we ought to do in this legislation to see to it that we finally get Chevy Volts driving out of the factory on American made batteries and to stimulate the technology of the American industry so that it will in fact produce cars of the kind that we want them to produce and to do so in competition not just with foreign manufacturers but with foreign governments which are subsidizing their manufacture?

SEC. CHU: Mr. Chairman, I wanted to express my thanks for the warm welcome that you've given me here today and to say to you that --

REP. DINGELL: You'll get a warmer welcome if you give me an answer. (laughter)

SEC. LAHOOD: I'm going to let Secretary Chu knows a lot more about this, but I want to say this. I do believe that there are some technology and research going on with respect to batteries that can be used by the American automobile manufacturers.

REP. DINGELL: Very little support from our federal government, very little. That's because of the policy we have.

SEC. LAHOOD: I suspect that given your interest in this there may be a little bit more from Congress in the future, and --

REP. DINGELL: And I want to get something like that in this legislation. I need your guidance and that of Secretary Chu to define what that will be.

SEC. LAHOOD: Well, you'll have our guidance.

REP. DINGELL: All right. I will submit a letter on this, but I want you alerted to the fact that something's got to be done on this.

Now to Administrator Jackson. EPA is moving forward with an endangerment finding for greenhouse gases. But the Congress wrote the Clean Air Act which our chairman so kindly referred to. It was our assessment at that time that CO2 was not a pollutant. In any event, you are now in this wonderful situation where you're going to have to regulate under the Clean Air Act unless this committee does something. Our chairman very happily has recognized this need, and in his bill and Mr. Markey's bill there's a provision which will get us down to the point where the federal government is going to regulate those under the new legislation. I commend them for that. But just how many regulations and regulatories will there be if we regulate under the Clean Air Act? My off-the-cuff figuring tells me it would be something on the order of 106. Am I incorrect in that judgment?

MS. JACKSON: I don't know how you came up with the number of 106, sir. But --

REP. DINGELL: Would you give us an answer on that particular point, please?

MS. JACKSON: Is the question whether there would be regulation under the Clean Air Act if this legislation --

REP. DINGELL: Well, you're going to have to play with everything in sight for CO2 production. And I'm asking you how many or I'm asking you to deny that we would have a situation where we would have as many as 106 regulations, perhaps more, on CO2 emissions because you'd have to do it under the state implementation plans. You'd have to do it under all kinds of other regulatory powers of the states and the federal government. And you'd have, as I have defined it, a glorious mess. Do you deny that we would have a glorious mess if you have to do it under existing law?

MS. JACKSON: I --

SEC. WAXMAN: The gentleman's time has expired. But we'd like to have you answer the question.

MS. JACKSON: Thank you.

REP. DINGELL: I look forward to your answers, gentlemen and ladies.

MS. JACKSON: Thank you. First let me state that I believe new legislation is the best way, as the President has said and I certainly agree, to address the problem of global warming and greenhouse gas emissions in our country. I believe that the endangerment finding, the proposal that's out certainly addresses that which the Supreme Court compels us to do, which is to speak as the Clean Air Act says EPA must now as to whether greenhouse gases endanger public health and welfare, and that draft is out for comment.

It certainly means that it is the first step in a potential regulation of greenhouse gases via the Clean Air Act. And if your point, sir, is that it is more efficient to do it via a bill, via new legislation like this discussion draft envisions, then I couldn't agree more.

SEC. WAXMAN: Secretary Chu, do you want to add something to this?

SEC. CHU: Yes. To answer Chairman Emeritus Dingell's question about that, the American Recovery Act is investing $2 billion in advanced better manufacturing. Also we are investing a significant amount of money in R&D to develop the next generation of advanced batteries.

SEC. WAXMAN: Thank you. Mr. Stearns?

REP. STEARNS: The first question I have is, this is directed to the Secretary of Energy. During your confirmation hearing, you testified that DOE has a legal obligation to safely dispose of nuclear waste. You said, I'm supportive of the fact that the nuclear industry is and should have to be part of our energy mix in this century." Doesn't it concern you then that nuclear energy does not even seem to be a part of this bill? I think this is a follow-up to Mr. Upton's question.

SEC. CHU: Well, while not specifically part of this bill, if you look at the sum package of all the bills like the American Recovery Act, nuclear energy is supported in those other bills.

REP. STEARNS: But don't you think there should be a separate title in this bill for nuclear energy? Just yes or no.

SEC. CHU: Pardon? What was the question?

REP. STEARNS: Do you think there should be a separate title in this bill for nuclear energy? Just yes or no.

SEC. CHU: We're looking forward to working with the committee on --

REP. STEARNS: No. Just yes or no. Do you think it should be? Can I have your yes or no answer?

SEC. CHU: A separate title in nuclear energy?

REP. STEARNS: Yes. Yes or no?

SEC. CHU: I think nuclear energy can be mentioned in this bill, but again it's working with this committee and the administration in developing --

REP. STEARNS: Is that a "no" then? You don't think that --

SEC. CHU: No. That was a, that was a -- we will look forward to working with the committee and making sure that nuclear energy is part of our energy mix.

REP. STEARNS: Last September you made a statement that somehow we have to figure out how to boost the price of gasoline to the levels in Europe, which at the time exceeded $8 a gallon. As Secretary of Energy, will you speak for or against any measures that would raise the price of gasoline?

SEC. CHU: As Secretary of Energy, I think especially now in today's economic climate it would be completely unwise to want to increase the price of gasoline. And so we are looking forward to reducing the price of transportation in the American family. And this is done by encouraging fuel-efficient cars; this is done by developing alternative forms of fuel like biofuels that can lead to a separate source, an independent source of transportation fuel.

REP. STEARNS: But you can't honestly believe that you want the American people to pay for gasoline at the prices, the level in Europe?

SEC. CHU: No, we don't.

REP. STEARNS: No. But somehow, your statement, "Somehow we have to figure out how to boost the price of gasoline to the levels in Europe," doesn't that sound a little bit silly in retrospect for you to say that?

SEC. CHU: Yes.

REP. STEARNS: Okay. You have also stated that the American electricity prices are anonymously and that coal is our worst nightmare, largely due to its contribution to global warming. As Secretary of Energy, will you support coal-fired electric generation in order to provide affordable electricity for the American people?

SEC. CHU: I believe the full statement, when I made that statement, is that coal as it's used today, in China and India especially where there's no trapping of sulphur dioxide and nitrogen oxide, mercury particulate matter, and no capture of the carbon dioxide, and when China was building coal plants at close to one a week without the sequestering of any of these pollutants, is a nightmare. So I think going forward I've also said that the world is not going to turn its back on coal, and the United States again should take a leadership position, as we have done in scrubbing the sulphur dioxide, the nitrogen oxide, the lead, the particulate matter, and working towards --

REP. STEARNS: Does that mean you would support more coal-burning operations generation?

SEC. CHU: I certainly will be looking forward to supporting coal-burning operations as we work towards clean coal, absolutely.

REP. STEARNS: Yes, because President Obama in the campaign indicated that if we can go to the moon we certainly can burn coal cleanly. And he sort of indicated that he would support coal operation if the coal was burned cleanly. The EPA analysis contains a rather aggressive assumption about carbon capture and sequestration technology coming to market. Does the Department of Energy have any analysis that shows that, CCS being available by let's say 2015?

SEC. CHU: Well, if you look at where we are today in terms of the capture technology and sequestration technology, we're beginning, not only the United States but Europe and Asia are beginning to look aggressively at piloting and bringing to commercial scale these projects. So it takes several years to build them, it takes several more years to have the lessons learned so that power companies can invest with confidence that this is not only technically feasible but it's economically feasible. And so at a minimum I see eight years for example as a time when very serious deployment begins. But we are working as fast as we can to begin the testing, both at pilot scale and at commercial scale.

REP. WAXMAN: The gentleman's time has expired. Mr. Rush?

REP. BOBBY RUSH (D-IL): I want to thank you, Mr. Chairman, for this hearing. And I certainly want to add my kudos and commendations to my friend from Illinois, Secretary LaHood. It's good to see you again, Mr. Secretary. And welcome to all of our witnesses today.

Mr. Chairman, I just want to make sure that the record is real clear here and that it was my contention and others contention that this bill is silent on nuclear simply because of the fact that nuclear energy just doesn't generate any common emissions, so the bill is silent on this. And I think that the future of the nuclear energy field is going to be quite good and quite positive, and the nuclear energy field is subject to thrive under this bill. I want you to know that my state has enormous investments in nuclear facilities, and we look forward to this bill and to a new era because we look forward to being able to generate jobs and additional revenues from nuclear energy. So Mr. Chairman, the comments from those on the other side, you know, kind of reminds me of the saying "this dog just don't hunt no more," because they are operating under a different kinds of premises here. So I want, for the record I want to clear that up.

I do have a number of questions, and I'm going to try to ask each and every one of you if you will to try to take a shot at these questions. I'm going to ask them all together, if I might, because as time permits I've got another area of questioning I'd like to engage in.

Currently the phrase "green jobs" and "green jobs training and certification" means different things for different jurisdictions, and each state or locality may define "training and certification" differently. In your opinion, should the federal government set standards for training and certification, and should that be done through legislative language or through the EPA's administration of the program?

The next question: How do we ensure that local communities with large percentages of population without college or advanced degrees be recruited and trained in green jobs technologies in order to be a part of the job creation and economic boom that this new energy sector is certain to create?

And lastly: How do we ensure that minority and women-owned businesses are able to gain equal access to federal funding in order to take advantage of the entrepreneurship and innovative business opportunities that this new energy section will enable? Should the rules of the road be written through the legislative action or through the administration and implementation within the agencies? How do we transfer funds, and ensure that the people we are trying to reach are indeed the recipients of this fund?

Each one, you can take a crack at it.

SEC. LAHOOD: Mr. Chairman, let me just see if I can answer the question on green jobs because an economic recovery plan, the Department of Labor is receiving a lot of money to really implement the kind of opportunities for training for green jobs, and if Secretary Solis were here she could really get in depth on this. But at our cabinet meeting that we had just this week with the President, she talked about the opportunities that are going to be created through her department with the money that comes from the economic recovery plan for training for people in the whole area of green jobs.

SEC. CHU: Let me also add that Secretary Solis and I had visited a community college recently where this community college was training, providing the proper training for these new green jobs. I think you raise a very important part. There are certainly many examples across the country where proper training programs have been developed. Right now because of the urgency of what we're trying to do in terms of getting the economic recovery money out there and in practice we first want to just make sure that best practices are shared in the states.

REP. RUSH: Yes. Administrative Jackson, would you speak specifically to the issue of certification and training?

MS. JACKSON: Certainly, Mr. Rush. Let me first state that, you know, environmental justice in the future is going to also mean that this green economy is green for all as others have said to coin a phrase, as others have coined. So I think that what you're asking is whether or not there needs to be assurances that all are actually able and ready to partake as we create and embark on putting America right in the bulls eye of the green energy economy. And certainly it should be. Again I would defer to my colleague, Secretary Solis, as to how to do that. I'm an environmental specialist myself.

SEC. WAXMAN: Thank you very much. The gentleman's time is expired. We'd like to at this time to recognize Mr. Whitfield.

REP. ED WHITFIELD (R-KY): Mr. Chairman, thank you very much. And I certainly want to thank the witnesses for being here today. And it's great to have Secretary LaHood here with us, who many of us had an opportunity to enter Congress with in 1994. But I think it's imperative that as we discuss this issue of energy policy that we not go into this with rose-colored glasses and that we just get it all out on the table, and then we'll look to Congress to make its decision and the American people will be very much aware of the pluses and the minuses about all of this.

Now the economists a couple weeks ago, or last week, had an article entitled "Saving the Planet and Creating Jobs May be Incompatible." And in that article they specifically referred to President Obama when he was in Europe. He gave a speech, and he said, "Think of what's happening in countries like Spain where they're making real investments in renewable energy. They're surging ahead of us, poised to take the lead in these new industries." This isn't because they're smarter than us or work harder than us, but because they are making investments with government funds in renewable energy. And these investments are paying off with good, high-wage jobs.

And then we hear a lot about green jobs, and we want green jobs. We need green jobs, particularly at this time in our nation's history, with our economic problems. And we've heard a lot of models being used about the jobs that are going to be created, and we hear models used about how cap in trade and renewable can improve the health care of the American people and can reduce dramatic weather changes and so forth. And we know that with all models there are all sorts of problems with models, depending on the information that's going in.

But I wanted to ask you all, you Mr. Chu particularly and Ms. Jackson, if you had read Gabriel Alvarez' study -- he's at King Juan Carlos's University in Madrid. And he used empirical data based on the government subsidizing renewable energy in Spain. And he came up with the conclusion exactly how much every job cost. And I know that President Obama in this renewable energy package is modeling using Spain as a model, one of the models. But for every job created in the renewable energy sector, so-called green job, that they lost 2.2 jobs. And this is a 50-page empirical study that he conducted.

And I was just, have either one of you seen his study?

MS. JACKSON: No. I'm not familiar with his study.

REP. WHITFIELD: Were you aware of the study? Had you even heard about it?

MS. JACKSON: In general I know that there are many studies out. That particular study I have not reviewed.

REP. WHITFIELD: Well, you've heard time and time again that people are concerned about loss of jobs.

I mean, the issue on cap and trade, of course, is that, yeah, China, they're not using scuttlers. They're not using carbon capture and sequestration. They're bringing on one new coal-powered plant every two weeks.

How do we deal with that, Mr. Secretary, if we unilaterally move to take steps and China and India and other countries are not? How do we deal with that?

SEC. CHU: Well, this is an issue where I believe the United States should take a leadership role. The president has emphatically stated that. And I actually believe that other developing countries like China -- Mexico has already stated that they want as a goal to reduce their carbon; even though they're developing countries, that they would like to reduce their carbon emissions by 50 percent by 2050. And I think if China -- if the United States does take the lead, China will follow.

REP. WHITFIELD: Well, I hope that as you work with the committee, that you all will keep these jobs as a priority, because if we're losing 2.2 jobs in existing industries, as they did in Spain, and they only picked up one job in green, the economy, then that's a losing proposition.

And I would also just point out a study that Johns Hopkins did, for example, that said if you replace three-fourths, for example, of U.S. coal-based energy with higher-priced energy because we're going to increase the price of energy with cap and trade and other things, it would lead to 150,000 premature deaths annually in the U.S. alone. Now, that was a study at Johns Hopkins.

Have you all seen that study? Because we hear a lot of benefits, you know, from moving in the direction we're moving. But this shows the negative aspect of it. Have you seen that study?

MS. JACKSON: No, Mr. Whitfield, but I'd be happy to review it.

REP. WHITFIELD: Okay. Well, my time has expired. Thank you.

REP. WAXMAN: The gentleman's time has expired.

The chair would request of the gentleman that he submit that study, because I think the committee would like to look at it carefully.

Ms. DeGette.

REP. DIANA DEGETTE (D-CO): Thank you, Mr. Chairman.

I'd like to follow up, first of all, on some questions that were being asked, that Mr. Rush was asking, about the effect of this legislation on low-income individuals. And I'm wondering, Administrator Jackson, if you could tell us, in EPA's analysis, how the discussion draft might affect the economy and individual households, in particular low-income households.

MS. JACKSON: Certainly. The overall message from EPA's modeling -- and again, it was based on assumptions from the drafters that I can discuss in a second -- was that the impact is quite modest on the economy in general and that the impact on the average household, annualized over a year -- an annualized impact for a year is around $98 to $140.

REP. DEGETTE: And why is that? Why is that impact relatively modest? Because to many outside observers, they think that this is going to present a huge cost burden to American families.

MS. JACKSON: Well, one of the opportunities and one of the things that I know this committee has before it to discuss is what happens with the money generated from the allowances. The value in the cap-and-trade system is in this currency called allowances. And one of the assumptions we made in the modeling was that about 40 percent of that money would go back to the American people, to households, in the form of rebates.

REP. DEGETTE: So even though the discussion draft is silent as to where the allowances would go, if the committee made a determination to put those at least 40 percent back to American families, then that would help reduce the impact on individual households, correct?

MS. JACKSON: Certainly that is the driver.

REP. DEGETTE: Another question that I have -- and this is really for Secretary Chu, but also either of the other witnesses could answer -- I'm wondering what your thoughts are about how realistic the discussion draft reduction targets are, both near term and long term.

SEC. CHU: I think they're aggressive, but I think we can meet them. If you look back in history of how we've actually met certain things -- Clean Air Act, Clean Water, how we dealt with the ozone layer -- inevitably what happened, especially of that aggressive obtainable target of 2050 that you reduce carbon by 83 percent -- I think one can -- it's science and technology that's going to lead the way to give us those solutions.

In the near term, efficiency will give us most of the gain immediately, and it will also save us money.

REP. DEGETTE: Let me ask you this question. Much has been made by some of my colleagues on the other side of the aisle of the fact that India and China in particular, but also other developing countries, don't seem to have much of an interest in controlling global climate change right now. Is that a reason for us to not move ahead with our aggressive goals in the U.S., Mr. Secretary?

SEC. CHU: The view of China has changed dramatically in the last several years. I had the opportunity about a year and a half ago to speak with Premier Wen Jiabao for about an hour on this issue. They are taking it very seriously, because they see the impact of climate change in their own country, and so they're taking --

REP. DEGETTE: Well, let me stop you. What about India?

SEC. CHU: India is less far along in this realization.

REP. DEGETTE: So to answer my question, then, in particular with India, but to a lesser degree with China and maybe other developing countries, is their lack of prioritization of this issue reason for us to not move forward?

SEC. CHU: No. We have to move forward. Right now the United States and China represent 50 percent of the carbon emissions of the world. And as we go forward, we have to take the leadership position.

REP. DEGETTE: Now, if, say, we don't get China participating fully -- although we hope we will -- if we don't get India and the other developing countries participating, what is that going to do towards the bill's reduction targets? In other words, are the draft legislation's targets tied to reductions in these Third World countries, or can we maintain some reductions in and of ourselves?

SEC. CHU: No, I think that what the bill is saying is that we will go forward and we will start to reduce -- aggressively (start to reach ?) the carbon emissions in the United States. But in a cap-and- trade scheme, it also provides for offsets. Some of those offsets -- much of those offsets will be in the United States, to the (agrarian ?) parts of our country. But some of that could also be used to help bring in developing countries.

REP. DEGETTE: Thank you.

Thank you, Mr. Chairman.

REP. WAXMAN: Thank you, Ms. DeGette.

Representative Bono Mack.

REP. MARY BONO MACK (R-CA): Thank you, Mr. Chairman.

And I thank our distinguished panel of experts for their time today, and just want to start by saying my congressional district is probably one of the most beautiful congressional districts, with all due respect to all of my colleagues.

And I'm extremely proud of the work we have done on renewables. We have invested, we believe -- if you start at one end of my congressional district, you'll see windmills that we're very famous for. You can go to the other end and see a lot of geothermal capacity, and certainly a lot of hope in between for solar projects.

But conversely, my congressional district is also one of the top five hardest-hit in the housing crisis. So this legislation is keenly important to me and to my district. As a Californian, I believe in innovation and I believe there's a lot in this bill that can go a long way towards energy independence. I believe there's a lot in this bill that will promote the technologies that we all believe in.

But again, I have very, very big concerns about the cost and what this will do to my constituents. California's rates are, on average, about 65 percent higher than the rest of the nation for electricity. And this truly can be a matter of life and death for my constituents. In the summertime, we see deaths occur for people who are afraid to turn on their air conditioning.

In years past we saw a flawed deregulation bill in California that created vast unintended consequences where we saw rolling blackouts and we saw what flawed policy, whether it be out of Sacramento or Washington eventually, can do to harm people.

So my concerns in this bill, I believe, have been well-known. And my colleague, Mr. Upton, has asked each of you to answer the questions in writing about what will this do for the cost of energy on our consumers. And I look forward to seeing those answers from all of the panelists.

What I'd like to know from Administrator Jackson, the EU -- California's AB 32, the Western Climate Initiative and Northeast RGGI system all handle transportation fuels outside of a cap-and-trade program, and, in the case of California in particular, works with fuels through a low-carbon fuel standard.

We have portions of both approaches in this draft legislation. Is it your opinion that putting fuels under the cap and trade is the right approach, or can we separate fuels out with a low-carbon standard?

MS. JACKSON: My opinion is that it is extraordinarily important that we deal with transportation fuels and that we do it in a way where we see meaningful reductions in the carbon footprint of those fuels, like a renewable fuel standard, like the low-carbon fuel standard, which are in this bill.

I do believe that there are alternate approaches. And I think the committee will have the opportunity to discuss that and find the most effective way of dealing with it. And I think anything EPA can do to assist you in those discussions, we're happy to do.

REP. BONO MACK: Well, you could start by answering the question. Should it or should not the economy -- (inaudible) -- cap-and-trade system?

MS. JACKSON: Well, I think that it can be addressed either way, and I don't think there is a right or a wrong. I think that it should be evaluated and discussed in terms of what gets the best result.

REP. BONO MACK: Secretary LaHood, I am a firm believer that the new clean diesel needs to be a little bit more thoroughly discussed in Washington, that there's great promise in clean diesel, but I might be entirely misguided. I would love to know your thoughts on clean diesel and if there is a role whether it be under low carbon fuel standard or just increased CAFE where clean diesel might fit it.

SEC. LAHOOD: Well first of all I will agree with you that you have one of the most beautiful districts in the country and some of the most beautiful golf courses, too, by the way. But I'm not prepared to talk about the diesel standard, I don't know whether Secretary Chu or Administrator Jackson can do that, but I'd be happy to get back to you with -- after I look into it. That is the -- not something that I have expertise in. I don't know if either one of these two folks want to say something about it or not.

SEC. CHU: Yes, I think the Department of Energy is certainly funding programs that develop clean diesels. As you know, there has been a change in the technology in diesels and moderate size diesel engines can now satisfy the very stringent California EPA rules on a particular matter on (knocks ?) -- that we didn't think was possible five and 10 years ago.

I should also say that I'm very proud of the fact that the Department of Energy funded a program that works with Sandia Labs with Cummings that makes large diesel engines to actually use high performance computing to design a cleaner diesel and it actually reduced the design time by 15 percent. The engine was designed in software and built and said it satisfies our design goal and say that they went into production.

So clean diesel is something that we will be investing in.

REP. WAXMAN: Gentlelady's time has expired.

REP. BONO MACK: Thank you.

REP. WAXMAN: Representative Green.

REP. GENE GREEN (D-TX): Thank you, Mr. Chairman. Like our colleagues I'd like to welcome our new secretaries and particularly our former colleague Ray LaHood.

Ms. Jackson, the EPA produced a preliminary analysis of the economic impact and discussion draft that was publicized yesterday and the analysis did not measure the overlapping impacts of a carbon cap, the renewable electricity standard, the efficiency standards, the new plant regulations and the low carbon gasoline program. From what I understand it was a preliminary draft and when we can we expect the analysis of measure that includes all parts of the bill taken together?

MS. JACKSON: Well I think that we will be happy to provide additional modeling analysis once the bill is ready, once you have an actual bill. It was a discussion draft that was incomplete. EPA was asked by the drafters to model a narrow portion of it and as I mentioned, we had to make quite a few assumptions to do that. But EPA stands ready to provide additional modeling analysis at the request of the committee.

REP. GREEN: Okay. Well I appreciate in fact since we're going to mark up in our subcommittee next week, I don't know if we can get those specifics to you because of some of those decisions are being made now. But I appreciate the update on the analysis.

The discussion draft both regulates refining through a carbon cap and imposes a new gasoline standard for carbon, essentially regulating these fuels twice. Last year, when the Senate considered a climate bill, there were estimates of gasoline price increases as high as 129 percent. And of course last year's price of gasoline was $4 so 129 percent was very substantial compared to what gasoline may be today.

My question for both EPA and DOE, would EPA and DOE perform an analysis of the gas prices and supply that considers the impact of the implementation of the second stage of the renewable fuels program, the new low carbon program and the carbon cap before we mark up the legislation? Is that possible that we'd look at both of those, the new low carbon program and the carbon cap before we get to a mark-up on the legislation?

MS. JACKSON: Are you asking about the low carbon program in this bill, sir?

REP. GREEN: In this bill -- yeah, the low carbon program in this bill along with the other requirements that we're going to have on refining capacity and ultimately the price of fuel. Does EPA and DOE have the capability to do that?

MS. JACKSON: I know that EPA's capabilities are focused around the impact of the cap and trade on emissions and then around prices but I'm certainly happy to work with the Department of Energy to make sure we get you whatever we can --

REP. GREEN: Secretary Chu, is that possible?

SEC. CHU: Pardon, is what possible? Can you --

REP. GREEN: Since we had some estimates in the Senate last year on climate change bills as high as 129 percent gasoline cost increases, does DOE perform an analysis of the gasoline price and supply that considers the impact of the implementation of the second stage of renewable fuels program, the new low carbon program and the carbon cap before we have an opportunity to mark up the legislation?

SEC. CHU: Yes, we will get the EIA and we'll get you that information.

REP. GREEN: Thank you.

I guess this one's for Secretary Chu. In testimony you talked about the administration believes that renewable electricity standard could help create a stable investment environment for America's innovators to do what they do best, create new jobs and entire industries. And I know coming from the state of Texas we don't have the percentage, I know the bill calls for 25 percent renewable electricity standard, the House I know seven passed at 15 percent renewable electricity standard that included electricity efficiencies. Why is there a difference to have a national standard as compared to what a lot of states are doing, some particularly in the south have hard kilowatt hours that they say this is what we're going to use from renewable electricity, and Texas is a good example because of the growth in wind power.

But why do we need a national standard when a lot of the states are already doing it?

SEC. CHU: Well surprisingly when I, or maybe not surprisingly, but when I meet with industry representatives, many of the industry representatives who are in these renewable energies want a national standard. It creates a uniform basis with that plus trading and the option for states to do this will create a market so that people who want to develop these new industries and further advance them and deploy them will say that we have a market that we can make these hundreds of millions of dollars in investments across the country.

REP. GREEN: Okay. My colleague Congresswoman DeGette from Colorado pointed out some of the concerns I think some of us may have about international agreements because I represent an area that's refining capacity and the refining that we do in the Houston, Texas can easily be transferred to China or India or Libya or Saudi Arabia who would love to be -- enhance their product to start being crude oil suppliers; they would love to be refine product suppliers. Our concern is that the United States needs to be a leader but we also need to recognize that some of the requirements we do similar to what our trade legislation has in the past that even if a country has very strong environmental laws, they're typically not enforced.

Don't you think particularly dealing with climate change and carbon because if a ton of carbon goes up in Houston, Texas, and a ton of carbon goes up in China, it's basically the same on the worldwide impact, unlike some of our other pollutants.

Do you feel like this legislation at least the draft that we have now is strong enough in dealing with not only the United States leading but also bringing the developing world along in trying to make sure that we don't have that dislocation of some of our basic industries?

REP. WAXMAN: The gentleman's time has expired but we'd like to ask the witnesses to answer --

MR. CHU: Very briefly, I think this is the reason why this bill is advocating cap and trade. The cap and trade would allow us to begin to bring in developing countries. I think the administration wants to work very much with this committee on deciding how to dispose of the allocations. We already talked about the sensitivities and most vulnerable places are society and also there's a sensitivity with regard to the most heavily energy intensive industries like what you speak.

And so this is something the administration will work with the committee dealing with these issues.

REP. WAXMAN: Thank you Mr. Green. Mr. Walden?

REP. GREG WALDEN (D-OR): Thank you very much Mr. Chairman and I want to thank our panelists for being here today.

The first question I have -- given the complexity of this legislation, I just want to make sure each of you has actually read the draft bill in its entirety, is that, can you give me a yes or no if you've read it in its entirety?

SEC. LAHOOD: I haven't had time to read all 600 pages.

REP. WALDEN: Six hundred forty eight, but that -- (chuckles) --

SEC. LAHOOD: I've not had time to read all 648 pages.

REP. WALDEN: (Laughs.)

SEC. CHU: It's not, neither have I.

REP. WALDEN: Ms. Jackson?

MS. JACKSON: Nor have I. My staff has certainly read through it.

REP. WALDEN: Okay. Well then I want to draw your attention to a couple of issues. First of all, I come from a district that's very rural, 70,000 square miles, home to 11 national forests where we have all kinds of catastrophic fires and enormous overgrowth of wood fiber. Is there a scientific reason Dr. Chu for excluding woody biomass off federal land under the definition on page eight of biomass? And why would the administration support that exclusion?

SEC. CHU: Well the administration will be working with the draft of this bill.

REP. WALDEN: Do you support this draft? Do you support that definition of biomass as found on page eight?

SEC. CHU: I would certainly look forward to working with you and Congressman looking at how biomass is defined.

REP. WALDEN: Okay. Well, biomass is defined right now on page eight as you couldn't take any of this off federal land. Federal land is completely excluded. I'd love to know a scientific reason for doing that.

Second, there are all these other definitions that private timber growers in my part of the world tell me would basically make it impossible for them to participate in woody biomass development, whether that's a chip plant, whether that's a pellet plant, whether that is -- all this stuff is being invested in right now, yet our department of Environment Quality in Oregon says there's virtually no emissions from heating sources that come -- that are heated with a wood pellet.

This is a disc -- they want to make these in my district using woody biomass off private and federal ground, put it in a mix with coal-burning power plant, reduce carbon emissions and improve efficiencies. And yet, under this legislation, you couldn't do that. It wouldn't count.

Let me move onto hydro. Is hydropower renewable or not?

SEC. CHU: Hydropower is renewable.

REP. WALDEN: Can you give me the scientific reason for why hydropower prior to 2001 is not renewable in this legislation?

SEC. CHU: I think whether it's included in this legislation or not -- just like the definition of biomass -- is not a scientific question.

REP. WALDEN: Okay. I agree. So there is no scientific reason. It's a political reason.

SEC. CHU: Well, I think the issue here is with hydropower, one wants to encourage new forms of renewable --

REP. WALDEN: Okay. Let me go to that. Page 11, new forms. It says "The hydroelectric project installed on the dam is operated so that the water surface elevation at any given location and time that would have occurred in the absence of the hydroelectric project is maintained subject to license" et cetera, et cetera.

Now, my understanding -- we have a lot of wind energy in my district. All the synergy is with the hydro system being able to store water when the winds blowing and be able to balance out the load. This is Bonneville Power -- my apologies to my colleagues here.

This is wind energy 1,000 megawatts that dropped to zero. This is the hydro system. Now, is there any way that new hydro could be used to balance out wind energy if the pool level cannot be modified?

SEC. CHU: Actually, I think that the -- especially in Oregon and with Bonneville Power Administration, this is something I heartily not only support, but I'm encouraging them to look at pumped storage as a method of storing wind energy when the weather --

REP. WALDEN: Right. And I don't have any problem with that. I think it's great. But you're going to store that behind some dam, right?

SEC. CHU: That's correct.

REP. WALDEN: You're going to affect the level somewhere, aren't you, if you had hydro? If you add a hydro facility? Can you -- could we meet this definition that says at no time and no location behind a facility that the water level could change because you added hydro? How could you ever meet that?

SEC. CHU: Well, I must confess, I'm not familiar with this particular part of the bill.

REP. WALDEN: Page 11. And with all due respect, I'm going to move on, because I only have 40 seconds.

Back to Ms. Jackson: In your EPA evaluation of the cost of this legislation, you only included -- if I heard you correctly -- the cap- in-trade provisions, correct -- in your analysis?

MS. JACKSON: Correct. EPA was asked to model what the impact of the cap-in-trade --

REP. WALDEN: Okay. So in your model -- since I've not had a chance to read through it -- what percent did you allocate to auction; what percent were allocated credits; and what cost-per-ton of carbon did you factor in your model?

MS. JACKSON: The allowance price that came out of EPA's analysis in 2012 is $12 to $15 a ton; $17 to $22 a ton in 2020. And I forgot the other part of your question.

REP. WALDEN: Percent of auction and percent of allocation.

MS. JACKSON: Yeah, the model did not -- I believe; I can double check this for you -- but I don't believe that question needed to be answered in order for the modeling to occur. I will double check.

REP. WAXMAN: The gentleman's time --

REP. WALDEN: That hasn't been answered in the draft text either.

REP. WAXMAN: The gentleman's time has expired.

REP. WALDEN: Thank you, Mr. Chairman.

And I thank the witnesses.

REP. WAXMAN: Ms. Capps.

REP. LOIS CAPPS (D-CA): Thank you, Mr. Chairman.

I want to just take a second to continue for my friend, Mr. Walden, in Oregon. I grew up in the shadows of Grand Coulee Dam. And we do have a lot of hydro energy in this country. And I know this discussion is what we should be doing -- this is a draft bill.

My thought would be that we want to move -- if we counted everything we already have, it would less incentivize us to go forward. And this legislation, I would hope -- from my reading of it -- is something that we want to push us forward. And then at some point, we'll have a debate about what counts -- what counts from what we already have. Just for starters.

But you know, as the 39th Earth Day was celebrated on Sunday in my district, there was a lot of enthusiasm and anticipation that this year could mark a big turning point; that we are finally addressing in a very significant way some longstanding energy issues and the challenge now of global warming.

A question, quickly, for each of the three of you: Secretary Chu, one of the important features of the discussion draft is that it is a very comprehensive approach to our energy problems. You have one title devoted to clean energy deployment, which will help us win the race against China and other countries to establish leadership in clean energy technology; Title II on energy efficiency -- a huge title also; and a whole Title III that sets up a system to reduce global warming pollution and hold energy companies accountable; and finally, a title seeking to protect consumers as well as our industries as we transition to this new energy policy -- huge shifts in the 21st century.

A lot of people have been arguing that this is taking on so very much, that this comprehensive approach is way too much -- that we should parse these out.

Could you give us a brief, but compelling reason, why it's important to address these in a comprehensive way?

SEC. CHU: I think it's because -- again, going back to what the president has said -- we've been doing this piecemeal for decades. And quite frankly, it's time -- because there are going to be tradeoffs here, there, everywhere. And so I commend this committee and the chairman on actually moving forward with a comprehensive bill, which is what the country needs.

REP. CAPPS: Thank you very much.

Administrator Jackson, the recent endangerment finding is showing that greenhouse gasses, indeed, do threaten the public's health and welfare. And you know, despite our very best efforts in this bill and other legislation as well, the climate is changing, has caused effects and will -- despite these efforts -- continue to do so.

And that is why -- I'm a public health nurse by background, and I'm committed, along with you and others, to ensuring that this legislation helps the American public and also helps developing countries adapt to the public health impact of climate change. I actually have some legislation to introduce separately on this topic.

What are some significant and targeted investments -- such as monitoring, planning, education and so forth -- that would ensure that we promote and protect public health in a changing climate?

MS. JACKSON: Well, one of the easiest investments that can be made is communities or governments investing in heating centers or places that, you know, protect people from extremes of climate. If we're looking at warming in areas -- we've seen the impacts, literally deaths that happened in heat waves -- and one of the ways that that can be easily addressed is by making climate centers or comfort centers. You could do that especially in urban areas.

On top of that, I think we mentioned education. So public professionals are on the front line of this, so I thank you for your work. And educating people about how to deal with changes in the climate and how to -- if they have health affects that are going to be exacerbated by that, how to be aware and alert. Not unlike what we do with ozone alert days -- making them understand what's coming so that they can take care of themselves is probably one of the first ways to keep you from having to take care of them.

REP. CAPPS: Thank you. Thank you so much. And there's more to come, I know.

But finally, Secretary LaHood -- our former colleague -- the average person in the United States now spends about 20 percent of their income per month on transportation -- largely on maintaining and driving personal vehicles.

What are some specific ways this legislation will help invest in people's ability to take more affordable, low carbon transportation opportunities?

SEC. LAHOOD: We think that there are opportunities to develop a concept called "livable communities" where you provide opportunities for people to get out of their automobiles if they want to walk to work, ride their bike to work, take a light rail to work, take a bus to work.

And the model for this really is Portland, Oregon. They've done a marvelous job of really creating an opportunity for people to get out of their car and have opportunities.

And we're working with the secretary of HUD -- that I hope can be included in the authorization bill of Transportation -- and also a program under HUD to really move forward with livable communities and create some models around the country and some pilots around the country to form different alternatives to people just using their automobiles.

Obviously, the announcement the president made on high-speed rail, the work we're doing with transit districts under the economic stimulus bill for more busses -- cleaner busses -- and the opportunities for light rail. We think this is our opportunity in Transportation and HUD to work with this community to create opportunities for people to use alternatives other than automobiles.

REP. CAPPS: Thank you very much.

REP. WAXMAN: Thank you, Ms. Capps. Your time is expired.

Mr. Terry.

REP. LEE TERRY (R-NE): Thank you, Mr. Chairman.

Mr. LaHood, my first question is for you. And this is a parochial question, more than anything that has to do with cap-in- trade.

But in the stimulus bill to our metropolitan area transit company -- busses. All we get is busses. We don't get rail in our area. We're only a metropolitan area of 700,000 so we don't qualify.

Our bus company is trading out their older diesel for just a newer brand diesel, not a cleaner energy, not natural gas. Is that the intention of the stimulus dollars, is just to let them trade out one piece of diesel equipment for another piece of diesel -- bus?

SEC. LAHOOD: The transit portion of the economic recovery plan is our ability to work with transit districts around the country that want to buy new vehicles, build facilities, whether they be bus facilities, or bus shelters, or facilities where --

REP. TERRY: So the energy efficiency aspect isn't a criteria?

SEC. LAHOOD: I've considered a bus company in St. Cloud, Minnesota. And the orders for these buses are way, way up. They're building --

REP. TERRY: Yeah, but I just want to know if energy efficiency, or clean energy is part of the criteria. I thought this was a softball question. I didn't know --

SEC. LAHOOD: Our people in the transit -- in the federal transit administration, are encouraging transit districts to buy fuel efficient buses for their transit district.

REP. TERRY: Okay, I appreciate that. Dr. Chu, really quick, this isn't even a question, it's just my rhetoric. But you said in your opening statement that you know coal is going to continue to be an energy source. But we hear statements about cap and trade being used as a tool to force out coal as a fuel. And even President Obama said when he was campaigning that, "under my plan of cap and trade system, electricity rates would necessarily skyrocket, so if somebody wants to build a coal plant, they can. It's just that it will bankrupt them, because they are going to be charged a huge sum for all of the greenhouse gas that's being emitted". So you can see when the president makes statements like that, that there's some cynicism when we hear about, well, coal is still going to be a fuel. Now, Administrator Jackson, is setting the rate at 11 (dollars) or $12 per ton of CO2 meet the administration's goal of bankrupting coal fired plants? Does that meet their goal?

MS. JACKSON: The administration has no goal that is nefarious for coal. The president, on TV, in ads I see him talking about clean coal and how clean coal is crucial not only for the environment but to create jobs and make coal, which is why now 50 percent of our --

REP. TERRY: I'm going to interrupt just because I only have 1:45. Methane is a greenhouse gas that is in here, and it's reported that methane is going to be calculated at a time of twenty five times the potency of CO2. Can you point me to a scientific study that says that methane is twenty five times more potent than CO2, as a greenhouse gas?

MS. JACKSON: I'd be happy to give you scientific back up for that statement.

REP. TERRY: I would appreciate that. Last, in regard to methane, what are the -- what industry do we have in the United States that has to worry about CO -- I'm sorry, methane emissions?

MS. JACKSON: Well, methane is natural gas, CH4. So, the natural gas industry, obviously, if any leaks. And in many states addressing leakage from natural gas pipelines is one very quick and important way. The other, our landfills. Landfill gases in our country, as food waste decays, as organic waste decays it makes methane. And previously that's been belched --

REP. TERRY: What's the largest emitter of methane gas in the United States?

SEC. CHU: Probably cows.

MS. JACKSON: May well be, livestock.

REP. TERRY: Yeah, welcome to Nebraska, the cattle state. Okay? Is it then the EPA's plan to start regulating the methane from cattle emissions?

MS. JACKSON: The EPA has no plans to regulate cattle emissions --

REP. TERRY: But there's nothing in this bill that exempts cattle.

MS. JACKSON: This bill takes regulation of greenhouse gases for sources, into this bill, away from the Clean Air Act. It's the Clean Air Act threat where people have these ridiculous notions of EPA taxing cows or regulating --

REP. TERRY: Well, it's been stated by publicly elected officials from Congress, so it's not spun stories.

MS JACKSON: Well --

REP. TERRY: But the point is, if nothing is in this bill that exempts the cattle industry, won't cattle have to be regulated?

MS. JACKSON: I do believe there is an exemption, but I will to check on that. Obviously, this discussion draft is meant to make sure those interests are protected.

REP. WAXMAN: Just on that point, for the gentlemen's information, only very large sources are covered by this, and there is a specific exemption for what would be considered cattle. We now go to Miss Harman.

REP. JANE HARMAN (D-CA): Thank you, Mr. Chairman. I recall in the last century, when Ray LaHood and I had offices next to each other in the back of the back of the Canon office building. Mine at least was contiguous space, his was divided by some kind of construction barrier. My guess is that his digs have improved.

I'd like to welcome this panel, and say how impressed I am by your credentials and experience on this issue. You can play a big role in guiding us, helping us, and helping the administration to fashion the right legislation, the right comprehensive legislation on climate change. I want to hold up my regular prop, which is the USCAP Blueprint for Legislative Action. The USCAP is testifying in the next panel, but I want to say how impressed I am that a diverse group of industry and environmental representatives has developed a consensus on basic principles, and then how impressed I am that this committee has used this as the basis for this bill. I just want to ask you briefly to comment on whether you agree that USCAP has played an important role here, and whether you agree that these consensus principles, which are not partisan, are very useful starting points. Let's start with Ray LaHood.

SEC. LAHOOD: I'm going to defer to these other two folks, but I know from discussing this with staff that they have played a very valuable role.

REP. HARMAN: Thank you. Dr. Chu.

SEC. CHU: My understanding is, as that document says -- I haven't read it in detail, but my understanding is that document says that fourteen to twenty percent reduction in carbon emissions by 2020 is economically possible in the United States. And so that statement alone, coming from industry, is a very powerful statement.

REP. HARMAN: Secretary Jackson.

MS. JACKSON: I certainly agree with my colleagues.

REP. HARMAN: Thank you. Now, Dr. Chu, I welcome to a fellow Californian. Your experience in California is very valuable to those of us from California, but I think also to this effort, since California, as everyone here knows, has been the leading state in terms of strict environmental regulation. There was a New Yorker article, in December, entitled "Note to Detroit, Consider the Refrigerator". And this is a story about you. Little profile, a little picture of you here. And the experience of California, which set out to regulate the efficiency of refrigerators.

Of course the industry objected. But then, guess what? Engineers, rather than lobbyists, figured out whether compliance was possible, and now, lo and behold, the size of the average American refrigerator has increased by more than ten percent while the price in inflation adjusted dollars has been cut in half. Meanwhile, energy use has dropped by two thirds. I tell this story, Dr. Chu, because you had a role in this. You talked about it. In this bill, in the efficiency section, we have some new bi-partisan standards on regulating the efficiency of outdoor lighting. And we also have a "cash for clunkers" provision, which would encourage folks to trade in old clunker refrigerators and appliances. Trade them in, get rid of them, not plug them in in the basement, in exchange for efficient appliances. And I just welcome your thoughts and thoughts by anyone else on the panel about these provisions, and the experience that California has had regulating the efficiency of appliances.

SEC. CHU: Well, the refrigerator story is one of several stories, but in fact, the efficiency has gone up so that the present day refrigerators are using one quarter of the energy they used in 1975. In fact, it was the anticipation of regulation, the regulation didn't start for several years, but as soon as the manufacturers realized that they couldn't go to either party, that both parties in California strongly supported these regulations, the efficiency immediately started improving. The reason the price went down inflation adjusted by a factor of two was because the better insulation and the smaller compressor of the refrigerator led to a reduction in the price. Now, I cannot emphasize how important this was. If you look at the energy saved today, we have roughly a hundred and fifty million refrigerators. The energy we're saving today, relative to 1974 standards, are actually more energy saved than all of the wind and solar energy we're now producing in the United States, just refrigerators alone. And so we can do similar dramatic improvements in building efficiencies, transportation. Building efficiencies can be even a bigger success story than refrigerators.

REP. HARMAN: Any other comments?

SEC. CHU: Well, I can go on and on --

REP. HARMAN: No, I was asking the others. Secretary Jackson?

SEC. LAHOOD: I'll let him go on and on.

MS. JACKSON: Well, he is certainly the expert. But I think that story is repeated over and over again, that oftentimes the movement toward regulation and the call for national standards unlocks innovation on the part -- I'm an engineer -- you know, unlocks engineers to move to where the market is going to be and unlocks the private sector investment to do it.

We've seen it with cars. We've seen it with the phase out of gasses that affect the ozone layer. Every time we have a challenge, once we make up our mind we're going to do it, innovation kicks in and makes it a lot cheaper and quicker usually than --

(Cross talk.)

REP. HARMAN: Thank you so much. My time is expired.

I'd just add that we're now seeing it indoor lighting, which this committee regulated a couple years ago; and California is moving on to conquer television sets.

Thank you, Mr. Chairman.

REP. WAXMAN: Thank you, Ms. Harman.

Mr. Rogers.

REP. MIKE ROGERS (R-MI): Thank you, Mr. Chairman.

You know, one of the things -- and Ms. Harman and I are working together on an incentive program to get us there. And when you look at the places where we've provided incentives, the market kicks in faster, cheaper, better.

And I get a little worried that this is a huge government mandated program that is very complicated. Who's involved in the trading? Who actually determines, at the end of the day, what the value of CO2 or methane is? How do you quantify it?

So, a lot of the jobs we're talking about are going to be folks who aren't really producing anything, but they're going to be living on the backs of those who are producing something because the government mandated a system that really hasn't been flushed out all that well. And I would hope that we would stop and pause for a minute and try to find ways to incentivize people.

I had a bill in 2006, an Energy Star system for servers -- computer servers, because the largest growing energy use in the United States at that time were server farms. And, low and behold, built on an incentive system, it has radically changed the way -- now they advertise on those servers, which are the most efficient servers. And it changed the way -- if you talk to the people in industry, they say it absolutely changed the way we buy, produce, sell servers. Fantastic. We didn't mandate anything.

And it concerns me for a couple of reasons -- and I wanted to talk to the secretary for a minute. I come from Michigan. Nobody's hurt more in this economy than we are. And to say that this administration has done more for the car companies than anyone else is a bit shocking to us who live there. And I'll give a couple of examples: They went in, and the guy who cut the workforce from General Motors in half, got concessions from the union, produced the car of the year last year, the CTS Cadillac -- oh, by the way, produced the car of the year, the Malibu -- both of which are built in my district, by the way -- this year.

The government came in and said, "You got to go. You're fired. Oh, and take the board with you. And you have 30 days for a viability plan." That's pretty hard to recover from when you're going through all of those tough times. And, oh, by the way, they have more cars that get over 30 miles to the gallon than any other car company -- period, in the world. The government didn't do that. They did that.

The Chevy Volt, which Mr. Dingell so aptly talked about, will revolutionize the way we think about commuting and how we power our cars. It's the first time it's an electric driven engine that is charged by gasoline, versus the other way around, which really radically departs even from hybrid technology. Very exciting.

Billions and billions of dollars of research, decades -- they were ahead of the curve, and what do we do? We come to this committee and kick them around. They finally got the attention of the American people. Really? In 2007, they mandated $80 billion in costs on these car companies. Gasoline went to $4.50, and they're struggling to make it. And we are losing jobs as fast as we can count them.

So, when you -- be careful when you tell us that. The proposal for cap-and-tax will raise the energy rates for producing everything in the United States of America.

Secretary Chu, you mentioned that, gee, if we raise the rates of gasoline it's going to hurt average Americans. Absolutely right. If we dramatically raise the rates of electricity, we will not be competitive when it comes to building anything in the United States. It is an attack on the middle class. It's an absolute slap in the face to everybody that got up and built good cars, or they built houses, or they got in their car and drove somewhere to build something of use in the United States.

And guess what India said this week? They're not going to play along. 'Go ahead, United States, make yourself uncompetitive, because we've got lots of mouths to feed and we would love to be the new center of the middle class in the next several hundred years.'

I'm just shocked that you would say that about a company who has done so much to survive and will lead the way in 2011 when that Chevy Volt rolls off the line. You know, in this -- also in the new proposal there's an inventory tax increase. And if you produce anything in a "just-in-time" manufacturing system you are getting hurt by this inventory tax increase. So, manufacturers are going to take it on both ends of this.

And that is very frustrating to those of us who represent lots of people who believe that the middle class is important. And, you know, I had questions but the fact that you stand before us and tell us that you have done more for the automobile companies than either administration, as you can tell, put a burr under my saddle.

We certainly don't think so. And we would hope that you would look at every job lost. You talk about green jobs created, you forgot to tell us how many manufacturing jobs go overseas. And we know there's a bunch of them.

So Mr. Chairman, I would argue we better go slow and we better worry about the middle class in this country that is quickly evaporating because of all of the weight and burden we're putting on their ability to produce anything in the United States.

REP. MARKEY: The gentleman's time has expired, but Secretary LaHood, if you would like to make a comment, we would allow you to do so.

Thank you.

The chair recognizes the gentleman from Washington state, Mr. Inslee.

REP. JAY INSLEE (D-WA): Thank you.

I'm from Washington. I just want to tell you I've got some constituents who are so happy you three are here today. They've been waiting for you to get to Washington, D.C.

And the obvious one is Dennis Hayes, one of the two co-founders of Earth Day, but the non-obvious ones are: the people at the Sapphire Energy company, which are developing algae-based biofuels which have zero-net CO2 emissions; the people in Infinia in Washington that developed the Stirling engine-based solar power system; the people at AltaRock in north Seattle, which are developing one of the world's leading engineered geothermal systems; the people at -- (inaudible) -- it's the world-leading energy efficiency contractor really probably in the world; the Better Place people that are developing an electrical infrastructure for electric cars; the Ramgen company of Bellevue, Washington, which has developed a way to sequester CO2 so we maybe can use coal cleanly and create hundreds of jobs in this country. These people are thrilled that you are here to promote these job creation exercises.

Now, we have heard -- on many occasions people have said that President Obama said that this is going to be bad for the economy at the -- some time. I've heard him say repeatedly that, in fact, this bill is going to grow jobs and, ultimately, be good for the economy.

I think this bill has been quite well balanced, because it speaks to multiple technologies in multiple ways to create jobs. It hasn't just picked favorites. Is that a fair assessment of this? I'll just ask Dr. Chu that.

SEC. CHU: Yes, it is a fair assessment. I think I would also want to emphasize that it is looking towards the future.

To use a sports analogy, when Wayne Gretzky was asked how come he was such a model hockey player, he said "because I skated to where the puck will be." And I think this bill actually brings that -- it positions America to go to the future and for the jobs of the future.

REP. INSLEE: I want to ask you about the low-carbon fuel standard. I think an important portion of this bill -- that will promote the development of low-carbon emitting fuels, we've tried to address this so that it is consistent with the other parts of the bill, other regulatory systems. For instance, it does not kick in effectively until the renewable fuel standard essentially expires. We've tried to tailor it in a careful fashion.

It also really draws on the European experience that a cap-and- trade bill, while very important, is not the only game in town. And I think their experience is, you have to take multiple approaches to this big challenge, not just a cap-and-trade system. Just wondered if you have any comments -- either Dr. Chu or Secretary Jackson, in that regard?

MS. JACKSON: I absolutely agree that the design of the (discussion ?) draft is such that it phases the low-carbon fuel standard in after the renewable fuel standards -- that are authorized also by a different, you know, a law of Congress -- are done. And I could not agree more that experience has shown that the cap-and-trade program, while an extremely powerful tool to harness the kind of private capital that you just referenced in your opening remarks.

And I, you know -- certainly, that is the key. The key is to make those who are investing in that green energy future able to do it in a way that they know with certainty that this country is turning its gaze towards that. It makes the private sector full partners in the game. And I think it's part of why USCAP -- it's not just the big companies of USCAP who've done extraordinary thinking on this, in partnership with NGOs, but also the smaller folks.

REP. INSLEE: Thank you. I'll take that as an answer.

I do want to ask one more question.

The longer I look at this, it becomes apparent that our ability to really maximize these clean resources -- of solar, and wind, and hydrokinetic, and the like, depends on the development of a good system fit for this century, which we do not have today. I think one of the great quotes I've heard is that "The bad news is that Thomas Edison would recognize our grid system." This is not really a salutary remark.

One of the things I hope we can work on in the development of this bill is a way to increase the ability to site increased transmission systems so that we can access the solar in the Southwest, and the wind in the Midwest, and the off-shore wind and the hydrokinetic, to move it where we need it.

But, we have some proposals to try to have back-stop authority for the federal government to assist the siting of transmission in the event that we can't do it through, sort of, the typical channels. Would you encourage us in that regard? Would you -- any comments you have, I'd appreciate it.

Dr. Chu, perhaps you wanted to --?

SEC. CHU: Yes. I would encourage you to try to develop this. I think you are quite right, as we go forward and develop renewable energy that we have to concurrently develop a new transmission system that can handle that.

The fact that wind and solar are variable means that you have to have a much more robust system that's able to port energy very rapidly from different parts of the country.

So, increased signing authority is one element. It can't be the only element because, after all, just within increased signing authority alone I think there has to be other elements that would help encourage the states and the local areas to allow that. But it's a very important part of our way into the future.

REP. INSLEE: We hope you'll continue to encourage us all. Thanks very much.

REP. WAXMAN: Thank you, Mr. Inslee. Ms. Blackburn?

REP. MARSHA BLACKBURN (R-TN): Thank you, Mr. Chairman. Thank you all for your patience this morning.

Ms. Jackson, I wanted to talk with you a little bit about your pronouncement of regulating CO2 under the Clean Air Act, and that you could do that, or the agency could do that with or without Congress and our consent. And I would like to know what your timetable is. How do you see the agency moving forward on that regulation?

MS. JACKSON: I'd certainly like to just clarify that. It's not without -- with or without Congress's consent. It's actually the Clean Air Act, the law passed by Congress and signed by the president, that compels us to -- and the Supreme Court's interpretation of the Clean Air Act that compels EPA to make a finding, and it is a proposed finding.

As far as timetable, that timetable starts with the proposal and a 60-day public comment. If it is a finalized -- and presuming it is finalized -- regulatory actions would proceed after that. The history of the Clean Air Act, which is a good guide, is that proposed regulations under that act take months to propose and, you know, after that the process --

REP. BLACKBURN: Okay. Let me ask you this, then: With whatever emission standard that you use in that as you go through that period, will sectors of the economy, such as Mr. Terry was talking about, farming -- and we all have great concerns about farming. Right now building construction, we have tremendous concerns about that. Are they going to be forced to meet that standard? What do you see coming at us through that?

MS. JACKSON: If there is regulation under the Clean Air Act in the future; if that happens, EPA would move, as it does on other regulations, to look at the largest sources first, and in our economy the largest sources of greenhouse gases are mobile sources -- automobiles and trucks -- and then the large stationary sources, especially the power generation sector.

So I think we could expect that if there were regulations, that would be where EPA's first regulatory actions would be. And, again, I don't believe we would ever get to the small sources. I think those discussions are really being made to scare people with a very unlikely future instead of focusing on the big issue, which is cars and power generation.

REP. BLACKBURN: So you see it affecting cars. Would you apply that also to this bill? In addition to your actions under the Clean Air -- or your proposed actions under the Clean Air Act, would you look at the bill and say the same thing, that you would focus more on the large items such as transportation rather than farming and home construction?

MS. JACKSON: Well, as the director pointed out -- as the chairman pointed out, we are actually -- the bill says that regulations would be for those large sources, over 25,000 --

REP. BLACKBURN: Okay, let me come to Mr. LaHood then. And, Mr. Secretary, I would like to just ask you, when you look at the low- carbon fuel standard in the bill, what do you see that doing to prices at the pump? If the focus is going to be on the large sectors like transportation fuels, what do you see that doing to the price at the pump?

SEC. LAHOOD: Well, I wouldn't have any idea. I don't know if Dr. Chu would or not. I just simply don't know the answer to that.

REP. BLACKBURN: Okay. Dr. Chu, any comment?

SEC. CHU: It will increase the price at the pump, but the other issue is that also in this bill, what we are focusing on is trying to hold transportation costs the same. And so this is also -- we're encouraging higher-mileage vehicles, things of that nature. And depending on how this committee, working with the administration with the allocations, the impact on the American people for the total cost of living we hope to be as moderate as possible.

REP. BLACKBURN: So, in other words, you all see this as increasing the cost to the American consumer -- the price at the pump and the price of electric power generation?

SEC. CHU: We see this as shifting costs so that what happens is as we turn the allocations back to the American public and to the energy sectors that would be most adversely affected, that the overall cost of living, if you will -- which is the essential thing -- plus the fact that we are aggressively moving towards higher efficiency -- higher-efficiency cars, higher-efficiency homes -- that those costs actually can be held constant.

REP. BLACKBURN: Okay. And, Mr. Chu, let me ask you this about the renewable energy, the 20,000 megawatts of renewable energy that would need to come online every year in order to meet the 2025 deadline at the 25-perent renewable energy standard. Do you think that that is a realistic goal?

SEC. CHU: Yes, it is.

REP. BLACKBURN: And then, how did you come to that conclusion?

SEC. CHU: Well, actually in the following way: I actually asked the EIA for an analysis several weeks ago, and what we do is we took a baseline of where we saw the baseline going. Then we added to it the stimulus, the Economic Recovery Act, which actually accelerates the deployment of renewable energy. You also -- in the provision of the bill there are small power producers, for example a university that has a cogen plant in a small town. You take those off. You don't want this university to have a renewable portfolio. You take that off the mix, from the 25 percent. It decreases the target by about 3 percent.

Depending on whether efficiency is going to be worked into this bill to take another 5 percent off, you're now talking about a difference of doing nothing and the 25-percent target as something on the scale of 5 or 6 percent additional, beyond what the country -- what the EIA projects the country is doing.

So it's actually quite a reasonable bill, in my opinion.

REP. BLACKBURN: Okay.

REP. WAXMAN: The gentlelady's time is expired. Mr. Matheson?

REP. JIM MATHESON (D-UT): Thank you, Mr. Chairman. I welcome the panel here. And, Secretary Chu, maybe following up on your discussion with Mr. Inslee, I know when I had a chance you a few weeks ago, we had a brief discussion about the electric transmission issue, about the need for finding ways to encourage greater investment and greater beefing up of that infrastructure.

You'd mentioned you'd been having discussions I think with EIA and others about this. This draft probably needs to be beefed up on its transmission section. Do you have thoughts about how we should be looking at that issue and things that we should incorporate into this draft bill in terms of encouraging investment in our transmission grid?

SEC. CHU: Well, I think -- I'm looking forward to actually working with the committee on this. Let me also say that not only the Department of Energy but FERC, the Department of Interior, Agriculture, CQ have been meeting regularly. We have now regularly scheduled meetings in trying to formulate what we should be doing in terms of transmission and distribution.

And so it is very much on our minds because, as I said before, this is a very necessary part of moving the country forward. We have a somewhat old fashioned energy and distribution system. It's divided into, you know, vertically organized utility companies, RTOs, ISOs, all this, and in the past what happened is that what happened is that these various sectors look out and they try to make the best judgments they can within their realm of responsibility.

And what that has led to is we don't have something that serves the nation in the best possible way, and we have incredible renewable energy resources, but they're distributed geographically across the country. So I think, you know, anything that can help the signing, anything that can help get the states and the local communities to say, yes, this is a necessary part of the development of the United States would be very appreciated.

REP. MATHESON: I think there is broad consensus that we need to look at transmission policy in this Congress. And I'm pleased to hear you're meeting with these other agencies. I think any input that you could offer us for legislative action to help move that forward I think would be appreciated by all of us.

The next question I wanted to ask you, Secretary Chu, if I could; one of the struggles I think that I'm having right now with putting this whole bill together is that, you know, we've had hearings on specific issues for two-and-a-half years and now we're trying to look at how it all looks as one package. And the concept of cap and trade is that there is going to be a market-based set of incentives to meet the cap. And that's the driver, to let the marketplace figure out the most efficient ways to go about doing this.

And yet there are a number of other sections in the bill where Congress goes in and specifically says, okay, on this technology we want to encourage it in this way, and for that technology, that issue we want to encourage it that way. And it's hard to find the right mix for how much Congress should get into those individual areas or not. For example, carbon capture and sequestration, I think it's appropriate that we've got to encourage that with the carbon capture sequestration of this bill.

But have you thought about the context of this bill where we have a renewable portfolio standard, we have the energy efficiency standard, we have a lot of different components of the bill that are trying to achieve lower carbon emissions, but it's under this broad category of cap and trade. And should we -- you know, you have a concern about it. Is Congress overly prescribing what we should do as opposed to the cap and trade mechanism that allows the marketplace to make those decisions?

SEC. CHU: Well, I think I will agree with you. Overall, the cap and trade allows -- it actually incentivizes the United States industry to look for lower carbon solutions. However, you know, it's not going to be signed until 2012. It's going to have to ramp up -- we need to give industry and consumers time to adjust.

And so, I view, for example, the renewable electricity standard as a different tool that is also necessary because a renewable electricity standard then creates a marketplace -- a guaranteed marketplace for things like wind, solar, new geo-thermal, run of the river hydro, things of that nature. And that guarantees a marketplace, so if I were an investor and said, well, do I want to invest tens to hundreds of millions of dollars? Well, I have a market for that.

REP. MATHESON: Do you think no-carbon emission coal production should be included in that to an extent, in terms of encouraging investors?

SEC. CHU: I think the overall goal should be to encourage all forms of no or very low carbon emissions but I would be glad to be working with the committee on these issues. But I'll just say that the renewable electricity standard is a different mechanism that's somewhat orthogonal to cap and trade. It's to created a market, to create a draw that will guarantee the investors that they can actually have a customer.

REP. MATHESON: Okay. Thank you, Mr. Chairman.

REP. WAXMAN: What was that word, octagonal?

SEC. CHU: Pardon?

REP. WAXMAN: You said a word that I didn't understand.

SEC. CHU: Oh, orthogonal. That means -- sorry -- (laughter) -- perpendicular. It means the carbon cap and trade is a way of overall globally putting the real costs of energy into the marketplace and letting the market then seek for solutions. It's overall what we need, but in addition to that something that more quickly stimulates investment in new technologies I think is also needed. So, in that case -- it's not exactly the same thing in a different way; it satisfies a different need.

REP. WAXMAN: Thank you. Mr. Scalise.

REP. STEVE SCALISE (R-LA): Thank you, Mr. Chairman.

Administrator Jackson, in your opening statement you talked about the jobs that would be created -- green jobs that would be created under a cap and trade bill. Can you quantify how many jobs you estimate would be created under this legislation?

MS. JACKSON: I believe what I said, sir, is that this is a jobs bill and that the discussion draft bill in its entirety is aimed to jumpstart our move into the green economy.

REP. SCALISE: And I think you quoted President Obama saying that it was his opinion that he would -- that this bill would create millions of jobs. I think you used the term "millions." Is there anything that you can base your determination on how many jobs will be created?

MS. JACKSON: EPA has not done a model or any kind of modeling on jobs creation numbers.

REP. SCALISE: Because you did do the analysis -- and there are definitely a number of questions I have with the assumptions that are made in your analysis. I wasn't sure. Since you used the term a "jobs bill" in your opening statement, I just wanted to know if you had anything to quantify or back that up.

MS. JACKSON: Well, I back it up on somewhat common sense, which is that if we're trying to move to a green energy economy -- and we heard Secretary Chu talk about the fact that the innovations that we come up with in this country are being used by other countries and manufacturing is moving there, the rhetorical question is, what is the plan to keep them here and how do we convince the private sector that we mean it, that we're going to be using the technologies that we --

REP. SCALISE: And in spite of -- and this isn't something that you said -- some people in the administration have claimed that there is no alternative plan. That's not an accurate statement because clearly there is an alternative plan that was presented last year on comprehensive energy. There is one that's being worked on this year on an alternative plan to cap and trade that would create jobs, pursue alternative sources of energy, but also make sure we don't lose the jobs we have.

And I think that's been a big concern raised by many groups predicting the number of jobs, and when the term "millions" is thrown around, many industry groups have used the term that millions of jobs would be lost, exported out of the U.S. economy into countries like India and China. Do you have any estimates on how many jobs will be lost by cap and trade?

MS. JACKSON: Well, all I know -- I'm not a jobs experts -- all I know is that jobs have been lost and our economy is hurting, and this is a plan to address that by moving a manufacturing sector here that the world will need and that our country will need.

REP. SCALISE: And, I mean, while you might not be a jobs expert, you're obviously talking about, you know, and touting this bill as a jobs bill. If you would claim that it would create jobs, are you making an assumption that it won't lose any jobs, that no jobs will be lost? Or if you don't make that claim, how many jobs would you expect to be lost? Because groups have made very large claims. I mean, the National Association of Manufacturers claims our country would lose 3 to 4 million jobs as a result of a cap and trade energy tax.

So I just wanted to know if you or any members of the panel want to answer that question.

MS. JACKSON: I'll go first and --

(Cross talk.)

REP. SCALISE: -- if you would.

MS. JACKSON: I know that lobbyists keep playing large doomsday scenarios -- quiet deaths for businesses across the country. That's what lobbyists said about the Clean Air Act in 1990 and it didn't happen. In fact, the U.S. economy grew 64 percent --

REP. SCALISE: So you don't think that --

MS. JACKSON: -- while this country cut acid rain emissions by more than --

REP. SCALISE: So you don't think that there will be job losses then? You're saying those doomsday scenarios by those groups --

MS. JACKSON: I believe one of the tasks in moving forward, as this committee discussed, is to figure out how the cap and trade process and the other aspects of the bill can be used to jumpstart and move us forward --

(Cross talk.)

REP. SCALISE: Right. Well, I know a lot of those details that aren't in the language, and that's been one of the expressions that's been made by many members of this committee, that a lot of those details still are not written in this bill: the allowances, a big portion of the bill; how this trading program would even work isn't in the bill.

Since its silent on allowances, does the administration have a position on allowances and how many allowances should be given for free to industry groups, to consumers? Do you all have a position on how allowances should be given away, because that's an unanswered question in this bill. Do you have a position? Does your department have a position?

MS. JACKSON: The president has said that he believes that there should be a 100-percent auction of allowances. That said --

REP. SCALISE: Should that be rebated to consumers? Should -- you know, because one of the concerns is how much, and many predictions are out there backed up by a lot of evidence on how much money taxpayers -- American families would pay.

Peter Orszag, the president's own budget director, last year gave testimony that a 15-percent reduction in carbon emissions would lead to a $1,300 a year increase in utility bills for every American family, on top of the fact that they would be paying higher for gas prices, which many of you have already acknowledged, as well as other energy-related items.

So some members of the administration have actually put some quantified numbers there. So, on the rebate side, would you be willing to rebate any amount that a consumer would have to pay in high utility rates back to them based on the allowances?

MS. JACKSON: The president has also called for a loan to value to be returned to those --

(Cross talk.)

REP. SCALISE: -- just yes or no.

REP. WAXMAN: The gentleman's time has expired, so we'll give the witness a chance to answer the question.

MS. JACKSON: Thank you. The administration looks forward to working on those questions and the president, though he's called for 100 percent option, is interested in working with this committee on ways to mitigate impacts on the economy and believes that the bones of that are in this discussion draft and there is flesh to be put on those bones, but that challenge could be addressed.

REP. SCALISE: What I --

REP. WAXMAN: Thank you, Mr. Scalise. Ms. Christensen?

DEL. DONNA CHRISTENSEN (D-VI): Thank you, Mr. Chairman. Three questions, I think.

Administrator Jackson, you've been asked several times about the recently proposed finding that greenhouse gases endanger public health, which list in particular six gasses. As you know, the Congressional Black Caucus and the Health Brain Trust, which I chair, also have priorities, the same population groups that you identify as being most vulnerable.

And I realize you're still in the comment period, and you've been asked a couple of questions about this, but are you satisfied that this bill could do what's necessary to address this finding, and if not, is there anything that could or would be added to this comprehensive bill which, among other things, reduces harmful emissions to address this?

For example, I think we list five greenhouse gases. We don't list the perfluorcarbons, and I'm a little rusty on my organic chemistry, but should we add that to the list?

MS. JACKSON: I do believe we need to address fluorocarbons, and I do believe that there is easy ways to do that. I know that one of the things being considered is a Montreal Protocol-like address.

To answer your larger question, yes, I believe this bill does a much better job than what EPA could do now under the authorities it has. This is a better solution. There are other solutions. The Clean Air Act offers some direction, but it is incomplete at best. And so I believe this bill is a much better way of addressing the endangerment finding, the proposal that we released last week.

DEL. CHRISTENSEN: Thank you.

Secretary LaHood, your department lists in your testimony several very active programs that reduce greenhouse gasses and advocates cleaner energy in many areas, and I particularly appreciate the Livable Communities effort because as we try to address how, if we look at the larger picture and the social determinants -- and I think that, you know, this gets to that. And don't forget, we talked about adding the secretary of Health and Human Services with HUD -- the HUD secretary in this effort. But do any of the projects that you've referenced specifically reach out to blighted, distressed communities, poor communities, minority communities that need this help the most?

SEC. LAHOOD: Absolutely, and that's the reason that we're working with the HUD secretary. And I might mention we're working -- I'm working with my two colleagues that are with me here today on the whole Livable Communities issue.

But Shaun Donovan -- Secretary Donovan and I have had numerous discussions about this, how we can really share the resources from both departments in looking at communities, not only terms of housing and different types of housing, but the transportation needs that need to be met so people can go to work and go to their doctor's appointments. And we're going to include rural areas in this too because the rural areas have as great a need as any part of our country.

And so there will be a real collaboration within the administration to make the whole Livable Community include housing, not only in the urban area but in the rural areas and incorporate some of the activities that are going on in these departments too.

DEL. CHRISTENSEN: Thank you. Dr. Chu, it seems as though the nuclear energy questions have kind of led up for a while, but just so I'm clear -- and it follows up on Congressman Rush's question -- where the bill refers to low-carbon energy producers, doesn't that automatically include nuclear energy producers?

SEC. CHU: I agree with you that nuclear energy is a low --

(Cross talk.)

DEL. CHRISTENSEN: When we talk about supporting and promoting low-energy carbon producers, we're, in essence, including nuclear energy?

SEC. CHU: Yes. I mean, as I've pointed out before, there are other bills. Whether it's incorporating this bill is something that the administration will be working with this committee on, but certainly the support of the nuclear -- restarting the nuclear industry has been supported in other bills, including the Economic Recovery Act.

DEL. CHRISTENSEN: Right, and I think you've been very clear about the administration's position. Thank you.

Thank you, Mr. Chairman.

REP. WAXMAN: Thank you very much. The chair now recognizes the gentleman from Illinois, Mr. Shimkus.

REP. JOHN SHIMKUS (R-IL): Thank you, Mr. Chairman. I do appreciate the panel here. It's good to see my friend, Ray LaHood, who is a mentor and a friend, and we're really excited about your position.

Dr. Chu, I look forward to meeting with you personally and having another chance in this committee to talk about the numerous things that are going on with the Department of Energy. I know your background. I've been following your experience, and I really do look forward to spending some time with you and I hope we can get that arranged.

Let me start out -- those who have been following this debate for many, many years, there is no hiding where I'm at. You know, I base this as the largest assault on democracy and freedom in this country that I've ever experienced. I've lived through some tough times in Congress -- impeachment, two wars, terrorist attacks. I feel this more than all the above activities that have happened. And I'll tell you why as I go through, but I have some questions.

Secretary LaHood, has China agreed to a low-carbon fuel standard, yes or no?

SEC. LAHOOD: I don't know.

REP. SHIMKUS: Oh, I think it's no. How about India? Have they agreed to some type of low-carbon fuel standard?

SEC. LAHOOD: I don't know.

REP. SHIMKUS: Okay. I would think that would be important in this debate if we're going to be world-competitive.

Dr. Chu, has China agreed to an international regime to cap carbon dioxide?

SEC. CHU: Not yet.

REP. SHIMKUS: Not yet. How about India? Has India agreed to an international regime to cap carbon dioxide or other greenhouse gases?

SEC. CHU: Nope.

REP. SHIMKUS: No, they have not.

Administrator Jackson, what is the largest emitter of methane gas?

MS. JACKSON: I believe we determined earlier, sir, that it is probably livestock.

REP. SHIMKUS: And I don't think that is correct. I think that the largest emitter of methane gas is wetlands. So if wetlands is the largest emitter of methane gas, you're not proposing that we drain wetlands, are you?

MS. JACKSON: Sir, we're talking about anthropogenic causes of global warming. Wetlands are a natural feature. No, we're not --

REP. SHIMKUS: So the answer is, no, you're not proposing draining --

(Cross talk.)

MS. JACKSON: -- wetlands.

REP. SHIMKUS: So the answer is no, you're not proposing draining wetlands.

MS. JACKSON: No --

REP. SHIMKUS: Okay.

MS. JACKSON: -- we are not proposing draining wetlands.

REP. SHIMKUS: Great. Thank you.

Let me follow up on Congressman Green's line of questioning. The problem we have on the analysis of what, Administrator Jackson, you have proposed to us, it's not your fault; it's the fault of this draft, which has no -- it's a big, gaping hole, and that is, what is the cost of the credits, what are the allocations? And my fear -- well, my belief is that this is an intentional move to deceive us so that we're not allowed to do the cost-benefit analysis.

Now, we know the cost-benefit analysis of the Lieberman-Warner bill because the allocations were addressed. And those numbers have that the cost of -- energy cost go from natural gas is an increase from 26 to 36 percent by 2020 and 108 percent to 146 by 2030. Now, this is a bill that is less stringent than this proposal.

The electricity cost in 2020 under the Lieberman-Warner bill was 28 to 33 percent increase, and in 2030, 101 percent to 129 percent. Do you dispute that analysis of the Lieberman-Warner bill? Anyone?

MS. JACKSON: I believe that analysis was done between EPA and DOE and that is part of the analysis. The analysis of this discussion draft does not show skyrocketing --

REP. SHIMKUS: Yeah, because we don't have all the data. We don't have -- we don't have the credit. It is the height of hypocrisy for this administration and this leadership to bring a bill to a hearing when we don't have the data to ask the great questions about the cost, and here's why:

We talk about the Clean Air Act amendments and no jobs lost. Well, I'll tell you, my committee, these folks have seen these. This is Kincaid Peabody number 10. Kincaid, Illinois, Clear Air Act 1990; know how many miners lost their jobs? And I have the Illinois DNR stats: 1,200 mine workers lost their job. The state of Ohio -- we've got colleagues on this committee. Do you know how many jobs were lost in Ohio under the Clean Air Act amendments?

Let me ask Administrator Jackson. Do you know how many jobs -- coal miner jobs were lost in Ohio because of the Clean Air Act amendments which you were addressing earlier?

MS. JACKSON: No, sir.

REP. SHIMKUS: Thirty-five-thousand. So those of us who want jobs -- and those of us who want jobs are going to try to defeat this bill, and we're going to hold our colleagues on the other side accountable, especially if they're from areas that depend on the fossil fuel economy. And I yield.

REP. WAXMAN: The gentleman's time is expired. We'll now hear from Ms. Castor.

REP. KATHY CASTOR (D-FL): Thank you, Mr. Chairman. And thank you to our panel for your leadership and your testimony today.

The American people are hungry for a new direction and a modern energy policy. I think the American people are so far beyond a lot of the partisan discussion in Washington. This really isn't a partisan debate. That's not what I hear back home.

First of all, I want to thank you for your efforts on the recovery plan because it shouldn't be lost on us that a historic foundation for a new direction in energy policy has already been laid under the recovery plan, and it's marrying job creation with our new energy future. The weatherization programs to save people money on their electric bill, greater energy efficiency, the transmission grid -- these are vital investments for the future of this country. But we've got a whole lot more to do, and this discussion draft is a good starting point, but, as you can tell, it's not going to be easy.

Dr. Chu, a couple of months ago the state of Florida adopted -- received a final report on Florida's renewable energy potential assessment received by the Florida Governor's Office. The Lawrence Berkeley National Lab was involved as well.

It states that solar technology has the largest renewable energy potential in the state of Florida. I guess this isn't any surprise for the Sunshine State, but right now we produce maybe 2 percent of our energy in Florida from renewable sources and the leading producer isn't even solar energy; it's biomass.

It's been interesting because even with just the discussions at the federal level and the state level, our electric utilities have started to invest in solar technology. The FPL is making a significant investment in South Florida in solar technology. So I think this lends credence to your market price ideas and how important it's going to be.

Will you go into greater detail on what we can do to make solar technologies more affordable, and is it going to be on the large scale? Are we doing enough in the discussion draft? Could you highlight certain concepts in the discussion draft? And what role do homeowners have to play as they -- because there is a hunger out there to install solar panels if they were affordable and it made sense.

SEC. CHU: Well, I think the first thing is -- the wonderful thing about solar energy is -- and I agree with you and that report -- is it has an enormous potential in the long run. If you consider how much sunlight energy is hitting the Earth -- I did a quick calculation a couple of years ago which suggested that a few percent -- less than 5 percent of the world's deserts, if you can harness solar energy, 20 percent of the energy heating that, and distribute it and store it, that would satisfy the world's current electricity needs -- just 5 percent of the world's deserts.

So the first thing I think one can do is there's lots of programs statewide, and also federal government encouraging solar, but one of the things is that solar energy is generally at a time when you need the most amount of energy, during hot summer days when the air conditioning is taxing the ability to generate electricity.

So I would advocate to encourage all states to evolve into what we call real time pricing.

If you ask, on those hot summer days where people are running their air conditioning, how much does the real cost of energy -- what's the real cost of energy, well, it's quite high, because the utility companies have to have installed backup generation systems for those 1 or 2 percent of the days where, in order to avoid a brownout, you have to have them running. But a lot of the time, most of the time, they're sitting idle. So that's invested capital sitting idle.

So if you do real-time pricing so that, on those hot summer days, the real price of electricity for the utility company, for the generators, is quite high. But alternatively, at nighttime it's quite low. And so that will encourage both businesses and homeowners to start to -- if they can put off the use of energy at night and use it during the day, that means we have to build less new power plants. The return on a particular investment will be much higher, which will drive the energy costs down for the businesses and for consumers. Real-time pricing will allow solar energy to give a big boost, because it is producing that energy when it's the most expensive. And so that's one thing.

The other thing is, quite frankly, you know, we should be taking leadership in inventing new sort of technologies. Our first loan that the Department of Energy approved was to a company that's going to next-generation -- (inaudible) -- solar technology. The company estimates that thousands of new jobs will be created. But mostly we're also -- the jobs are incredibly important, and we're also trying to develop the technology so the United States resumes its leadership position in new solar technologies that can drive the cost down considerably. And that's the other important part of this.

REP. WAXMAN: Thank you, Ms. Castor.

REP. CASTOR: Thank you.

REP. WAXMAN: Now the chair recognizes Mr. Radanovich.

REP. GEORGE RADANOVICH (R-CA): Thank you, Mr. Chairman.

I want to welcome the secretaries and the administrator to the committee. Mr. LaHood, it's great to see you back in the Congress. I represent the San Joaquin Valley in California. A lot of farming happens there. And I'm -- you know, there's a lot more my constituents are worrying about than global warming right now. We've got an imposition from the Endangered Species Act that shut down the pumps in the Delta, and a lot of my farmers are getting zero allocation this year. It's costing 40,000 to 60,000 jobs and it's going to result in about a $9 billion loss in the state's industry.

And I honestly think that my state is suffering more from environmental alarmism than it is global warming. And added to that, this concept of cap and trade to me just seems to make the problem worse.

Secretary Chu, welcome. I noticed that there was a -- you paid a visit to California recently. I think you were quoted in the LA Times saying that, because of global warming, agriculture in California was going to be gone in about 30 years. And one other quote -- and I just want to have a dialogue on this -- was a quote that somehow we have to figure out how to boost the price of gasoline to levels in Europe, which at the time was $8 a gallon.

My concern for my constituents is that if you adopt something like a cap-and-trade system, how do you -- I don't see how you can -- the math doesn't work. You add a price of gas onto the fact that we have a man-made drought in California. Taking (water away ?), you increase the price of the gallon of gas or diesel from five bucks back up to six bucks a gallon, the way it was last year, you're going to see the state's largest industry, $90 billion, the main supplier of fruits and vegetables to the nation, farm out. And if you don't like the fact that 70 percent of your energy comes from foreign countries, how would you like to have 70 percent of your food supply leave the country? Because that's what's happening in my neck of the woods.

I, for the life of me, can't figure out how you think that you can do something like this without dramatically increasing the debt, national debt, and deficit by subsidizing a false economy and by raising the price to consumers on energy. I think when the public finds out the true cost of this thing, you're going to see a smackdown that the World Wrestling Foundation would be proud to see by the public toward this plan, which is unreasonable.

I think research, developing efficiencies in energy and smoothing this transition to another fuel, I think, is a great idea. But this cap-and-trade notion -- once the public finds out that their prices in the home and at the fuel pump is -- they're not going to buy this. This will stop. This will not go anywhere when you see the true cost of this thing come down.

In the energy portfolio of the United States, 70 percent of it consists of fossil fuels. Twenty percent is nuclear. Ten percent is renewable. And of that renewable portion, 10 percent is hydro. Hydroelectricity, that's about 3 percent. So you're proposing to take 70 percent of our energy portfolio and make it how much, how long?

And I guess my question to anybody who's going to answer this is, what do you think is going to be the cost to the household? Because I see numbers of $3,000 or over $3,000 to the cost of this plan to the household. And then we've talked about the high price of gas, Secretary Chu, eight bucks or whatever. I mean, you know, it's an increase on the energy supply of the United States.

How on earth do you think you can pull this off without breaking the back of the government and of the consumer?

MS. JACKSON: I'll go first, and then I'll turn it over to the secretary.

EPA's modeling shows not at all those cost ranges, sir. It shows $98 to $140 for the average household per year, not $3,000. That is a misstatement of an MIT study that actually showed --

REP. RADANOVICH: In your opinion. I mean, in your opinion.

MS. JACKSON: Certainly it's my opinion.

REP. RADANOVICH: I mean, I'm not sure I trust you for the facts as much as I would trust that study. How can I know -- I mean, how do I know your modeling is correct? And what are your assumptions? What are you basing -- you mentioned 40 percent goes back of the cap-and- trade revenues to the household. How does that work? How does that happen?

MS. JACKSON: The history of EPA's modeling shows that we are usually conservative, that we usually overestimate the cost, not underestimate it.

REP. RADANOVICH: How does that 40 percent get back to the consumer?

REP. WAXMAN: The gentleman's time has expired. Let the witness -- the witness will have a chance to answer briefly.

REP. RADANOVICH: If you could answer, how does that 40 percent get back?

MS. JACKSON: The 40 percent was modeled as a rebate back to American consumers, to American households. That's what we were --

REP. RADANOVICH: A check in the mail?

MS. JACKSON: It gets back to the -- I don't know what the --

REP. RADANOVICH: Could you let me know how that gets back to the consumer, please?

MS. JACKSON: Sir, it's not my decision to make.

REP. RADANOVICH: Well, maybe you'd better remodel so you can explain to people how that's going to get back in their products.

REP. : Would the gentleman yield to me?

REP. RADANOVICH: Thank you, Mr. Chairman.

REP. : Would the gentleman yield to me?

REP. RADANOVICH: Yes. I don't have any time left, but I'm happy to --

REP. : The statement about California agriculture being gone, that wasn't because of the bill. That was because of global warming.

REP. RADANOVICH: An interpretation of the results of global warming 40 years from now.

SEC. CHU: If that was the quote, it was inaccurate, because I know about this. I was citing some studies -- two studies, in fact -- of predictions of what will happen if we continued on a business-as- usual model. And those studies said -- and they took two scenarios -- an optimistic scenario; you keep carbon below 500 parts per million. It's a target that we're all trying to work towards.

And in that study, in the first part of this century, by 2050 the snow pack in California will be reduced in the optimistic scenario by 26 percent; we lost 74 percent of the snow pack that we had today. And in the pessimistic scenario, business-as-usual scenario, it would be down to 60 percent. By the end of this century, the 21st century, it's considerably less, as much as 93 percent decrease in the snow pack of California, if we continued business as usual. And so it was that concern for the agriculture of California that I was speaking of.

REP. RADANOVICH: And I respect that -- if I can respond, Mr. Chairman -- environmental alarmism in the form of Endangered Species Act that is a runaway locomotive, and the cost of this cap-and-trade system will kill agriculture long before global warming does.

Thank you, Mr. Chairman.

REP. : Mr. Chairman, I have a letter here from John M. Reilly correcting the statement that they made -- and it's a letter to the Republican leader -- which has a much lower cost per family. And if it's possible to have this put in the record -- if not, I'll distribute it to the committee -- but it is a corrective letter which states correctly the right information.

REP. WAXMAN: Without objection --

REP. : With the right to object, Mr. Chairman.

REP. WAXMAN: The gentleman --

REP. : Just, sir, if my former colleague can do that, I'd like the article from The Weekly Standard that debunks those numbers also included into the record.

REP. WAXMAN: Without objection, we'll take both documents and put them in the record.

REP. : Thank you.

REP. WAXMAN: Ms. Sutton.

REP. BETTY SUTTON (D-OH): Thank you, Mr. Chairman.

And thank you for your testimony. It's been very, very insightful.

You know, I think that at the beginning you all laid out the challenge that we face. We talked about the potential for jobs under this bill and, Administrator Jackson, your desire to jump-start us towards that new green economy. And Secretary Chu, you also agreed that there's great potential.

But you really put your finger on the point when you said that the question is how do we transition from here to there, okay.

And -- and that's extraordinarily important to the people that I represent in Ohio and I think it's extraordinarily important to people far beyond Ohio.

This is something that is going to require all of us to be a part of and all of us to benefit from, so not just in the long term but in the near term. And so I think it's that near-term challenge that is the one that is so difficult for us to -- to get past. Now, some comments were made by -- by one of my colleagues a little while ago and -- and I think that the statement was those of us who want jobs are going to try to defeat this bill. I am not somebody who's going to try to defeat this bill.

I certainly want jobs. I want them in the future and I want them now for my folks. They need them, both now and then. I do want to find ways, and I believe it can be done, to collaborate to get to those jobs of the future without sacrificing the livelihoods of the people in the process because that gap in the middle is where we can lose so much. So that's where -- where I come from with respect to -- to the very complicated issues and challenges we face but it has to be done.

We have to go -- we have to go where we know we need to go and we all agree we should go. But we can't lose people in the process. So the first question I have, Secretary Chu, is -- is regarding coal. Of course, you know, about 86 percent of electricity consumed in Ohio and more than half of the country's electricity is produced by coal-fired power plants. Even with aggressive growth scenarios, and your testimony reflects this, for renewable energy combined with energy efficiency measures coal will still be a major U.S. energy source, at least in the near term and probably well into our future.

Clean coal technology is critical to address climate change here and abroad yet there are no commercial scale carbon capture and storage demonstration projects worldwide. Secretary Chu, you've stated that we must develop an inexpensive way to capture and store carbon emissions from coal-fired plants and that U.S. has to take (a leave ?). The Recovery Act obviously provided significant funding for CCS demonstration projects but how do you plan -- how does the administration plan to accelerate the development of these technologies including those that offer very high levels of CO2 capture?

SEC. CHU: Well, I think -- well, what we're doing is the following. We've had a certain amount of economic recovery act money, 2.4 billion (dollars) in total, devoted towards trying to accelerate the progress on capture and sequestration of carbon from coal. We're moving forward as fast as we can. There's -- I'm having discussions. We're -- we've decided to fund a number of projects.

We're looking forward, very high in my priority -- we're looking forward to exploring all the avenues that we think can lead -- has a reasonably good chance of leading to deployment we'll say in the next -- beginning of the -- (inaudible) -- eight -- eight years or, you know, optimistically even less. So -- so right now, the technology of -- what technology we should use is not there. Gassification is a promising technology. We are -- would like very much to bring that to a commercial demonstration scale to see if it is economically viable. But there are other things.

We also have to capture carbon at the stack. There are existing coal plants that have just been put up and those investments -- you know, a modern coal plant is a couple billion dollars and you're not going to turn this -- this investment off and so -- and as I said before, China is rapidly expanding their coal facilities. So we have to develop technologies that can capture the carbon at the stack. So we're -- we're looking at a myriad of ways. I should also say that very active discussions -- there's roughly 10 projects being considered in Europe, several in Asia, to really collaborate so that our dollars go as far as possible. So this is something very important to the United States. We have the largest coal reserves in -- in the world.

REP. WAXMAN: Thank you, Ms. Sutton.

REP. SUTTON: Thank you.

REP. WAXMAN: Mr. Burgess?

REP. MICHAEL BURGESS (R-TX): Thank you, Mr. Chairman. Like Representative Bono, I have one of the most beautiful districts at least in north Texas. We have solar. We have research and development at Intech. We've got an academic research at University of Texas at Arlington that's (on my ?) Fort Worth campus. Wind energy -- we manufacture the big windmill blades at a -- what was formerly an oil field services warehouse up in Gainesville, Texas.

We -- (inaudible) -- we've got a lot of landfills and landfill methane but my understanding is well, when you think of the state of Texas we have -- we have and have had a fairly robust renewable portfolio standard. We are the leader in wind -- wind energy. This is, of course, the result of the current governor and the previous governor -- Rick Perry and George W. Bush -- who made a commitment to wind energy. But Texas produces a lot of energy.

So in order to meet a percentage in the renewable portfolio standard by -- by 2020, even though we're the nation's leader by far in production of wind energy if we're not able to count the energy that we produce with landfill methane -- if we are not able to count pound for pound (with ?) amount of carbon dioxide that we save with energy efficiency, then we're going to have a very, very difficult time meeting that energy efficiency standard. Can you address that?

Are there ways that we may write the regulations such that we could get credit for what we're doing with energy efficiency? You -- Secretary Jackson, you said -- Administrator Jackson, you said it was the low-hanging fruit and I think it's up to 40 percent of the energy we consume now could be saved, but we're going to be restricted on -- on how much of that we can count toward our renewable portfolio standard. Is that correct?

SEC. CHU: Well, I'll -- I'll speak first. I'm not sure about the details of the bill whether -- I mean, this is a good point of discussion whether you can consider -- again, through capture of the methane from landfills and from sewage treatment plants this is (not being ?) otherwise that would have escaped in the atmosphere.

REP. BURGESS: Okay. Let me interrupt you because I only have a limited amount of time and we've made the point for the chairman and I think he heard you. Dr. Chu, you said in response to a question the United States is losing jobs, losing the -- being the leader in the technology development. Secretary -- Administrator Jackson, you said in your testimony that we're going to be producing clean-energy jobs, jobs that cannot be shipped overseas yet Dr. Chu was concerned because many of these solar photovoltaics, many of the wind turbines, are manufactured overseas. If we make an enormous investment in solar photovoltaic and wind turbines, are those jobs not already shipped overseas?

SEC. CHU: Actually, no. There are (agreements ?) --

REP. BURGESS: But, Secretary, with all due respect, you answered a question saying we've lost the leadership position in this country because that manufacturing has gone overseas so we're no longer the leader.

SEC. CHU: Well, I didn't -- I said that the technology leadership has gone overseas -- that the wind turbines were developed overseas -- the modern wind turbines. But right now today the president is -- is in Iowa on a --

REP. BURGESS: The second wind-producing state --

SEC. CHU: Yes.

REP. BURGESS: -- well under Texas, let's for the record --

SEC. CHU: But -- but my point is that it's an old Maytag plant where jobs were lost but it's now manufacturing the towers for wind turbines.

REP. BURGESS: Let -- but still, the point is that those jobs can go overseas. There's nothing in the legislation that I've seen before us that would prevent those jobs (or we make a ?) statement as was made in the testimony submitted to us jobs that cannot be shipped overseas. How are you going to ensure that those jobs are not shipped overseas? Are we going to have trade barriers and tariffs? What -- what are -- what are going to be the mechanisms that we'll use?

MS. JACKSON: Sir, most people refer to energy efficiency jobs. Those cannot be shipped overseas because energy efficiency work must be done at home.

REP. BURGESS: Photovoltaics and wind turbines.

MS. JACKSON: Now, renewable sources can certainly go overseas and some have gone. We are in a race to get them back and to keep them here.

REP. BURGESS: Let me -- let me interrupt because I'm -- I'm going to run out of time, and Dr. Chu, this last question will be for you. We heard Mr. Radanovich talk about the major economic convulsion that perhaps could result from the legislation that we're considering before this committee. We asked -- Chairman Barton talked -- Ranking Member Barton talked about the -- how did the oil get so far up north where it's so cold to begin with. Mr. Dingell's gone. Mr. Rogers is gone. But the Great Michigan Glacier from 15,000, 20,000 years ago actually melted because of global warming.

I'll stipulate that warming is happening but we have not heard from anyone who's come and testified to this committee as to the smoking gun, if you will, that the sine qua non that demonstrates that mankind is responsible for the global warming that is occurring outside and as an aberration -- outside of naturally occurring solar cycles. So major economic convulsion yet we lack the -- the fundamental piece of evidence that would tell us that this is what we must do because we are after all causing the problem to occur.

You're a scientist, Dr. Chu. Can you perhaps give some comfort to Mr. Radanovich's constituents and my constituents that we indeed have that missing link that mankind is responsible for what is occurring? Perhaps the carbon dioxide is going up because the solar cycles have changed and the planet is warming. There is another --

REP. WAXMAN: Mr. Burgess, your time has expired.

REP. BURGESS: -- plausible explanation. So I will yield to Dr. Chu for an answer.

REP. WAXMAN: Dr. Chu, you can give an answer and then we have to move on.

SEC. CHU: In brief, I think the -- there is very strong compelling evidence that the lion's share of what we're seeing, the warming that we're seeing, is due to human activity. I would be glad to meet with you and to go over the details of what -- what that (cross talk).

REP. BURGESS: I wish you would. Your NOAA scientists could not provide us that information so I would very much like to hear it from an expert such as yourself.

REP. WAXMAN: Mr. Gonzalez? And let me announce as I recognize Mr. Gonzalez, Administrator Jackson and others on the panel were promised they'd be able to leave at 1:00 and I regret that all members won't have a chance to ask questions. You'll be the last one to ask questions and then we will proceed with the next panel -- that those who did not get a chance to ask questions of this panel as the first questioners after -- after -- for the second panel. Mr. Gonzalez?

REP. CHARLES GONZALEZ (D-TX): Thank you very much, Mr. Chairman. My question will be directed to Secretary LaHood. It's great to see you and we do miss you. First of all, the general observation is that -- that I -- we all believe that as a result of this piece of legislation that the cost of energy will increase and that consumption behavior is going to be modified, and that is a good thing actually, and these are -- as I've said before, these are not insurmountable obstacles to being responsible in passing a piece of legislation that is reality based.

My concern is going to be more on fossil fuels and the need and the use of them during this transition or conversion period as we adopt new technologies, as more efficient vehicles are made available -- alternative fuel vehicles, battery operated motors and such -- because I think that is going to take time. Take into consideration some of the -- the following. If we assume that we have a fixed number of vehicles now on the road and we have to figure out how many of those are going to be retired, where are we going with sales of vehicles and so on, historically15 to 16 million vehicles were sold in the United States.

For 2008, that was reduced to about 12 to 13 million. In 2009, it is projected it'll be 8 or 9 million. Historically, I guess I'll call it the shelf life of a vehicle before you turn that over, is about 11 years, and I don't know where all these -- when you put these figures together where we're -- we're going to end up because I'm trying to get an idea from Secretary LaHood is how long he thinks this transitional period will occur as we gain greater efficiencies and such. We also know that out of all the millions of cars in the United States, which I've been told is 200 million -- and I'll need to check that -- there may be only 116,000 are powered by natural gas and that the market share of hybrids comprises no more than 2.2 percent of our entire vehicle (you want to call it ?) population in the United States.

Taking into account how long the technology, how long it'll take the manufacturers to make the vehicles available and such, can we determine the need for the traditional fossil fuels -- what I call the transitional or conversion fuel -- as we leave one stage of where we presently find ourselves to that which we're trying to attain when it -- when it comes to greenhouse gas emissions? Secretary LaHood?

SEC. LAHOOD: Well, we complied with the president's executive order to have a rule that we'll require the car manufacturers to have a much higher CAFE standard by 2011, and now that that work is done we're working with EPA and others to try and figure out the path forward beyond 2011, to develop with car manufacturers and others the idea that we can get to a higher gasoline standard. So the -- the direct answer to your question on fuel efficiency, the car manufacturers have to meet a much higher standard on CAFE standards by 2011 in the cars they manufacture.

On the battery powered and -- they're way ahead of the curve on this. They're going to be rolling out -- GM is going to be rolling out an automobile that is run on batteries. The hybrid vehicles are taking off. The flex-fuel vehicles are taking off. But we know that within the next couple of years the auto -- American automobile manufacturers will have automobiles that will be powered by batteries and we know that the fuel efficiency standards will be set much higher by 2011 and then even higher than that beyond that. So those are sort of the benchmarks that we're working with with the automobile -- American automobile and other automobile --

(Cross talk.)

REP. GONZALEZ: But taking into account, and it does trouble me because I want to support this final piece of legislation that we're not dealing with realistic expectations. So whatever the manufacturers will be able to provide out there for a willing and able buyer, we're not factoring in the economic hard times for the next few years because I think they're going to be there, and people retaining their cars longer periods of time, manufacturers not being able to even meet the needs of vehicles that are totally more efficient. But if they are they're probably going to be hybrid meaning they still have an internal combustion engine that it's going to be run with traditional fossil fuels.

That doesn't mean we're throwing in the towel and giving up on this endeavor. All I'm saying is let's be realistic about the need for a domestic production and refining capacity in the United States. Mr. Secretary, in looking at energy independence when it comes to fuels, do we need to increase or decrease domestic production and refining capacity of fossil fuels in the United States in the foreseeable future?

SEC. LAHOOD: Well, I -- I can't be specific in answering that question but it's -- it's something that everyone is, you know, investigating, looking into, debating, and -- but I -- I don't have a specific answer for that at this point.

REP. GONZALEZ: Thank you very much. I yield back, Mr. Chairman. Thank you.

REP. WAXMAN: Thank you very much, Mr. Gonzalez. All right. I want to thank our three witnesses. You've been very, very helpful to us and patient in answering the questions, and we thank you so much for your input and we'll look forward to working with you on this legislation. Thank You.


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