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U.S. Department of Energy Energy Efficiency and Renewable Energy

Testimony of David K. Garman

Assistant Secretary
Energy Efficiency and Renewable Energy
Before the Subcommittee on Energy and Water Development Senate Committee on Appropriations
"FY 2004 Energy Supply Budget Request"


March 12, 2003


Mr. Chairman, Members of the Subcommittee, I appreciate the opportunity to testify before you today on the FY 2004 budget request for the Office of Energy Efficiency and Renewable Energy (EERE).

As you know, the EERE budget is split between Energy and Water Development and Interior Appropriations Bills. Our overall budget request for FY 2004 is $1,320,000,000 compared to $1,318,651,000 requested in FY 2003. Our FY 2004 request for our Energy and Water Development programs totals $444,207,000, or 34 percent of EERE's budget, compared to $407,000,000 requested in FY 2003. The most notable programmatic expansions are in the area of hydrogen and fuel cell vehicles research and development (R&D), reflecting the priorities and recommendations of the President's National Energy Policy, the Department of Energy's (DOE) mission, EERE's Strategic Plan, and the EERE's Strategic Program Review.

This request reflects EERE's streamlined new organization. Two years ago, EERE was divided into 31 programs, in 17 offices, stovepiped into 5 market sectors. Overlapping layers of management and duplicative and inconsistent business systems generated significant inefficiencies and made it difficult to ensure accountability and the most cost-effective application of taxpayer funds. Responding to the President's Management Agenda and our own Strategic Program Review, we launched a dramatic restructuring of the EERE program in June 2002. This restructuring streamlined our organization, eliminating up to four management levels, and centralizing administration functions into a single support organization with a focus on developing consistent, uniform, and efficient business practices. This is arguably the most dramatic restructuring in EERE's history.

  • The restructuring combined all the hydrogen and fuel cell activities, formerly scattered across two market sectors and three programs, into a single program for greater efficiency and synergy.

  • The restructuring combined all the bioenergy-related activities, formerly scattered across three market sectors and three programs, into a single program focused on advanced biorefineries. If successful, this research will allow waste plant matter to be turned into high value chemicals, fuels, and power.

  • The FY 2004 budget is fully aligned with EERE's new management structure and strategic goals, allowing a strong linkage between congressional appropriations and the performance and productivity of EERE's research and development (R&D) and deployment activities.

The FY 2004 budget supports EERE's R&D and technology deployment efforts to provide Americans with increased energy security and independence through utilization of diverse domestic supplies, greater freedom of choice of technology, and reducing the financial costs and environmental impacts of energy utilization.

As Secretary Abraham noted recently, the Department has "...an ambitious, long-term vision of a zero-emissions future, free of reliance on imported energy." We must call upon science, technology, and the research talents in our national laboratories, universities, and industry to help us move beyond today's energy choices towards carbon-free generation of electricity and fuels, including hydrogen.

Secretary Abraham has also made clear that all missions at the Department flow from our core mission to support national security. This EERE FY 2004 budget demonstrates that the Department takes its responsibility toward national security seriously as it does its responsibilities toward science and technology. The Department has taken a deliberate and integrated approach to its research and development portfolio, using the strengths of all DOE programs to address this central mission. Clearly, environmental security and economic security underpin national security and each is sustained by science.

What is more, there is only one way to build an integrated budget and that is to engage in a vigorous and disciplined planning process that forces programs to set priorities.

Our EERE FY 2004 budget request has been developed with these challenges and opportunities in mind.

The President's Hydrogen Fuel Initiative

Mr. Chairman, the big news in our FY 2004 budget is, of course, the President's Hydrogen Fuel Initiative, which directly supports EERE's number one priority to dramatically reduce or even end dependence on foreign oil.

Our nation currently imports 55 percent of our oil - a dependence that is projected to rise to 68 percent by 2025. Since two thirds of the 20 million barrels of oil we consume each day is used for transportation, we must focus on finding alternative, domestic fuels to power our transportation system if we ever expect to reverse this trend.

In his recent State-of-the-Union address, President Bush announced a groundbreaking plan to transform our nation's energy future from one dependent on foreign petroleum, to one that utilizes the most abundant element in the universe - hydrogen. The concept for this initiative is simple, yet profound - create automotive operating systems that run on hydrogen rather than gasoline. The benefits will be considerable and widespread. Hydrogen can be produced from diverse domestic sources, freeing us from a reliance on foreign imports for the energy we use at home. Hydrogen can fuel ultra-clean internal combustion engines, which would reduce auto emissions by more than 99 percent. And when hydrogen is used to power fuel cell vehicles, it will do so with more than twice the efficiency of today's gasoline engines - and with none of the harmful emissions. In fact, fuel cells' only byproduct is pure water.

On February 6, 2003, at an event on energy independence in Washington, D.C., featuring new uses for fuel cells including automobiles, the President reiterated his commitment to his new Hydrogen Fuel Initiative stating, "The technology we have just seen is going to be seen on the roads of America. And it's important for our country to understand that by being bold and innovative, we can change the way we do business here in America; we can change our dependence upon foreign sources of energy; we can help with the quality of the air; we can make a fundamental difference for the future of our children."

During his speech on energy independence, the President also provided details of his initiative stating, "We must make hydrogen more plentiful and produce it in the most efficient, cost-effective way. That is one of our challenges...We must increase the capacity of hydrogen storage systems. And we must put in place the infrastructure to get hydrogen to the consumers. There would be nothing worse than developing a car and having no place for somebody to find the fuel. People aren't going to buy many cars if they can't refuel their car."

To support the President's vision we need to make the necessary research and development investments to develop vehicles powered by hydrogen fuel cells and the infrastructure to support them. The President's Initiative will accelerate research and development on hydrogen production, delivery, storage and distribution, and establish the necessary safety-related codes and technology standards. In addition, it will accelerate the demonstration of fuel cell vehicles and hydrogen infrastructure so that these technologies can be validated under real world conditions.

The government's role here is clear. We will coordinate and cost-share the high-risk R&D work of numerous private sector partners and our national network of science laboratories. Government coordination of this undertaking will also help resolve one of the difficulties associated with development of a commercially viable hydrogen fuel cell vehicle: the "chicken and egg" question. Which comes first, the fuel cell vehicle or the hydrogen production and delivery-refueling infrastructure to support it? The President's Initiative, in conjunction with FreedomCAR - the public-private partnership with U.S. automakers launched last year to accelerate the development of practical, affordable hydrogen fuel cell vehicles - answers the question by proposing to develop both systems in parallel. By so doing, federal investments will help to advance commercialization of hydrogen fuel cell vehicles and infrastructure by 15 years, from approximately 2030 to 2015.

To meet this challenge, the President's FY 2004 budget request commits $1.7 billion over five years for the FreedomCAR partnership and Hydrogen Fuel Initiative. This includes $1.2 billion for hydrogen and fuel cells - $720 million in "new" money (i.e., not included in baseline projections of spending). EERE's overall FY 2004 budget request for the FreedomCAR partnership and Hydrogen Fuel Initiative is $256.6 million. There is an additional $15.5 million for hydrogen production research requested by the Offices of Fossil and Nuclear Energy, and $0.7 million requested by DOT Research Special Projects Agency.

Mr. Chairman, we stand on the cusp of revolutionary change in personal transportation in this country - and the world. The President has completely recast this Nation's vision of personal transportation by describing a future where vehicles will be fueled by hydrogen - and he is taking the steps necessary to lead us to that future.

FY 2004 Energy and Water Development Budget Request

For FY 2004, we request a $37,207,000 increase above our FY 2003 amended budget request.

Let me now briefly review the portfolio of Renewable Energy Resources programs within the Office of Energy Efficiency and Renewable Energy. Before I begin, I'd like to highlight how the President's Management Agenda has helped us focus our resources and become better stewards of the taxpayers' dollars. For example, the R&D investment criteria help us guide budget decisions to ensure we fund only activities that can provide real public benefits and that the private sector would not undertake without our help. And the budget-performance integration initiative, through the Program Assessment Rating Tool (PART), has helped us to focus on continuing to improve our performance goals, and to identify program planning and management strengths and challenges.

Two years ago, the President's Management Agenda pointed out that Federal government R&D programs in general "do not link information about performance to our decisions about funding. Without this information, decisions about programs tend to be made on the basis of anecdotes, last year's funding level, and the political clout of local interest groups." This year, our funding request is in better alignment with what it will take to achieve our goals.

Hydrogen Technology

The Hydrogen Technology Subprogram is a key component of the President's Hydrogen Fuel Initiative.

The program works with industry to improve efficiency and lower the cost of technologies that produce hydrogen from renewable energy resources and natural gas. In addition, the program works with the national laboratories to reduce the cost of technologies that produce hydrogen directly from sunlight and water. Hydrogen can be used in stationary applications for residential, commercial and industrial fuel cells, as well as in fuel-cell powered vehicles. Development of this clean energy carrier will lessen our dependence on imported fuels in both stationary and transportation applications.

In FY 2004, we request $87,982,000 ($48,101,000 more than our FY 2003 budget request) for the Hydrogen Technology Subprogram (there is an additional $15.5.million in the Offices of Fossil and Nuclear Energy for a total of $103.5 million). This will be used to establish a national research effort on hydrogen storage; to enhance technology development for hydrogen production from renewables and distributed natural gas; to accelerate codes and standards development; to create a major hydrogen education effort; and to validate hydrogen infrastructure technologies to support fuel cell vehicle test and evaluation.

Our FY 2004 budget request represents a significant consolidation and realignment in the Hydrogen, Fuel Cells, and Infrastructure Technologies Program when compared to the FY 2003 budget request. This budget request reflects the functional priorities of the program: hydrogen production and delivery, hydrogen storage, hydrogen infrastructure validation, safety and codes/standards related to hydrogen and its infrastructure, and education and crosscutting analysis. The new budget structure consolidates all electrolyzer research and development under production and delivery.

In addition, the FY 2004 request proposes that all fuel cell activities be performed under Interior and Related Agencies Appropriation. This is a change since some fuel cell work was requested under Energy and Water Development Appropriation in FY 2003. Also, all hydrogen production, delivery, and storage work is proposed to be under the Energy and Water Development Appropriation request in FY 2004. This is a change since some hydrogen storage and off-board natural gas reforming work was requested under Interior and Related Agencies in FY 2003.

The increase in funding for FY 2004 compared to the FY 2003 request enables hydrogen production, storage, and infrastructure technology goals to be accelerated 15 years to enable industry to make a commercialization decision regarding hydrogen infrastructure and fuel cell vehicles by 2015.

Specific FY 2004 program activities include:

  • Accelerating development of low-cost, small-scale reformers and separation technology to enable hydrogen generated from distributed natural gas to achieve $3.00 per gasoline gallon equivalent by 2005 and to be competitive with gasoline by 2010 ($1.50 per gasoline gallon equivalent, delivered, pre-tax).

  • Accelerating and expanding research on the production of hydrogen from renewable resources to reach a 2008 goal of $2.55 per gasoline gallon equivalent at the plant gate.

  • Creating a national research effort in hydrogen storage technologies, based on low pressure, solid state materials, to enable achievement of 2010 goals of 2.0 kWh/kg (6 percent by weight hydrogen storage capacity), 1.5 kWh/l and $4/kWh.

  • Conducting operations of the Las Vegas fueling station to determine emissions and system efficiency. Initiating limited "learning" demonstrations of hydrogen refueling stations to support fuel cell vehicle test and evaluation.

  • Providing leadership in developing safety-related codes and standards and conducting necessary coordination with the international community so that U.S.-based technology can compete globally.

These efforts support the Hydrogen Fuel Initiative, and will enable the development of hydrogen fuel cell vehicles for the showroom floor by 2020. Success of these programs will begin to eliminate the need for imported oil, while simultaneously beginning to eliminate emissions and significantly reducing greenhouse gases from America's transportation fleet without affecting the freedom of personal mobility we demand.

Solar Energy Technology

The EERE Solar Energy Technology Program develops solar energy systems that are more efficient, reliable, and affordable for converting sunlight into electricity, space heat, hot water, and lighting. A primary objective of the program is to increase the value of solar energy by putting it at the point of use, making it an integral part of super efficient, state-of-the-art residential and commercial buildings and industrial establishments.

In FY 2004, we request $79.7 million for the Solar Energy Technology Program, which is level funding with our FY 2003 request. The FY 2004 activities are as follows:

Under Photovoltaic (PV) Energy Systems, we will increase technology development to support module and systems reliability improvements. In thin film modules, we will increase funding for accelerated lifetime testing and diagnostics to determine failure modes in pre-commercial products. In systems, we will increase funding for the inverter initiative to accelerate attainment of a next-generation grid-tied inverter with a greater than twenty-year lifetime. We will begin the second year of three-year contracts under the PV Science Initiative with universities to develop next-generation PV materials and devices that have the potential for dramatic cost reductions. The PV Science Initiative will more fully develop new ideas and concepts that can replace conventional technologies with a new generation of lower-cost, easier-to-manufacture technologies. In the Thin Film Partnership, the program will continue funding the most promising industry cost-shared contracts on technologies making the greatest achievements.

In Solar Building Technology Research, we will continue development of a polymer water heater capable of operation in cold climates and test a hybrid solar daylighting system.

The Concentrating Solar Power subprogram will be phased-out in accordance with the National Academy of Science recommendations.

Zero Energy Buildings

The focus of the Zero Energy Buildings concept involves efforts to integrate renewable energy systems into building designs and operations, such as integrating photovoltaic, water heating systems and/or space conditioning systems. These buildings use renewable energy sources so that the buildings produce as much energy as they consume on an annual basis.

In FY 2004, we request $4.0 million for the Zero Energy Buildings program, $4.0 million less than our FY 2003 budget request. The program will evaluate its activities to ensure no duplications or overlaps with Interior-funded efforts in the Building Technologies Program.

As part of the reorganization of EERE in FY 2002, Zero Energy Buildings activities have been moved from the Solar Energy Program to the Buildings Technologies Program. This shift will enable more effective access to the residential and commercial building industries for Zero Energy Buildings technology developers and expand the range of opportunities for industry participation and cost sharing. The Zero Energy Buildings activities will continue to maintain effective technical coordination with the Solar Energy Program.

In FY 2004, we will focus on completing the evaluation and monitoring of first generation Zero Energy Buildings homes, built by leading homebuilders, to verify a 50 percent reduction in annual utility bills to $600 per year for an average sized home in a temperate climate.

Wind Energy

Wind energy systems have been the fastest growing source of electricity worldwide for over a decade, and are now providing cost-competitive power in high wind speed areas. As a result, the Department's focus for wind energy R&D has shifted to advanced technologies to allow economically viable development in the nation's more widespread lower wind speed areas. These areas are on average five times closer to major load centers, providing an opportunity to relieve transmission constraints as a major wind energy barrier, and over twenty times more abundant than currently-economic high wind areas. Under the Technology Viability key activity, the program is underway with a broad range of cost-shared public/private partnerships coupled with laboratory supporting research and testing to achieve low wind speed development goals for both large turbines used for utility scale wind farms, and for smaller (< 100 kilowatt) turbines for use in distributed power applications. The Technology Application key activity targets remaining technical and institutional barriers to wind energy use, including grid systems integration, resource assessment, outreach to states and stakeholders, and support for near-term industry needs such as certification testing.

In FY 2004, we request $41,600,000 for the Wind Energy subprogram, $2.4 million less than our FY 2003 budget request. The request is in alignment with our projected needs to achieve our goals.

In FY 2004, the Wind Energy subprogram will select and commence several new industry partnership projects for concept studies, component development, and/or full system development under competitive solicitations issued in 2003 for both large wind turbines and small, distributed power scale turbines. It will also conduct research efforts in wind turbine aerodynamics, structures, materials, advanced components, and wind characteristics to support development of new and improved tools and technology for low wind speed system design and applications. Advanced systems integration studies will assess opportunities for coordinated operation of wind and hydropower generation, and production of hydrogen from wind and hydropower.

Hydropower

In the case of hydropower, the program focuses on improving the environmental performance of hydropower plants by developing turbines that reduce fish injury and improve downstream water quality. The Department has engaged the expertise of the national laboratories to study and better understand hydropower's biological and environmental effects. Study results have been critical to the development of design thresholds for industry to use in their efforts to improve existing turbine designs.

In FY 2004, we request $7,489,000 for the hydropower subprogram, the same level of funding as our FY 2003 request.

Under Technology Viability: Advanced Hydro Turbine Technology, we have increased funding in FY 2004 by $500,000 to support testing of new prototype hydro turbines.

Under Technology Application: Low-Head/Low-Power R&D, we have decreased funding in FY 2004 by $500,000, to reflect a shift in funding to higher-priority testing of new prototype hydro turbines under Technology Viability.

In FY 2004, the hydropower subprogram will develop and test full-scale (greater than 1 MW) prototypes of retrofit and new environmentally friendly turbine designs under competitively selected public private partnerships awarded in prior years. The Department will also complete the low head/low power resource assessment of all 50 states, identifying the undeveloped hydropower resources that could be developed without building new impoundments.

Geothermal Technology

The Geothermal Technology Development Program works in partnership with U.S. industry to establish geothermal energy as an economically competitive contributor to the U.S. energy supply, capable of meeting a portion of the Nation's heat and power needs, especially in the West. The program focuses on exploration and reservoir technologies, and drilling research because better understanding of geothermal resources and cost-effective means of accessing those resources will enable industry to locate and produce new geothermal fields at greatly reduced cost.

In FY 2004, we request $25,500,000 for geothermal program activities, $1 million less than our FY 2003 budget request.

In FY 2004, the program will step up work on Enhanced Geothermal Systems (EGS) cost-shared projects at three competitively-selected sites. In FY 2004, we will increase funding for EGS by $2.5 million over our FY 2003 budget request due to the high priority of this program area and budget projections supporting the field development phases of the cost-shared projects. The program will also support at least five cost-shared, competitively-selected, exploration projects initiated with industry to validate new technology and find and confirm new geothermal resources within the United States.

Biomass and Biorefinery Systems R&D

In FY 2004, we are requesting $69,750,000 for Biomass/Biorefinery Systems, a $16,255,000 decrease from our FY 2003 budget request.

For the first time we have brought a diverse industry together and produced a vision and R&D roadmap that has increased the level of industry investment. This roadmap has allowed us to begin the process of rebuilding the program and focusing on the most promising long-term opportunities for these technologies. We have dramatically improved the collaboration among federal agencies, especially the Department of Agriculture (USDA). In addition, the Farm Bill provided direction and funding to USDA to work with DOE in advancing biomass technologies. In fact, the Farm Bill provides $14 million in FY 2004 mandatory biomass funding for the U.S. Department of Agriculture, which DOE's Biomass Program will jointly manage at the direction of the Biomass Research and Development Board established under the Biomass R&D Act of 2000.

The Department has focused its R&D efforts to high-priority, long-term technologies, both within the Biomass Program and the entire EERE portfolio. Earlier last year, the EERE bioenergy activities were integrated into one office to help focus resources on a limited and more coherent set of goals and objectives, increasing collaboration with industry, reducing overhead expenses, and exploiting synergies among similar activities in support of a future biorefinery industry. This focus on a clear set of goals, substantial leveraging of research funding with industry, and the transfer to industry of a number of demonstration activities that industry should continue to pursue without federal support has allowed a reduction in the need for funding to achieve our goals.

Our FY 2004 activities will include additional long-term, high-risk R&D in thermochemical conversion in support of biorefinery development. Efforts will continue on the testing of clean up and conditioning technologies and catalysts needed for biomass gasifiers. An industrial partner will validate the performance of an organism capable of fermenting multiple biomass sugars for ethanol production.

Intergovernmental Activities

Intergovernmental Activities support the program mission by providing consumers with improved choices for efficient and renewable energy products. Intergovernmental Activities are managed as part of the Weatherization and Intergovernmental Program, which is comprised of grant-related and technical assistance activities brought together through the reorganization of Energy Efficiency and Renewable Energy (EERE) in FY 2002. Combining these activities will improve the Department of Energy's effectiveness in deployment of efficient and renewable energy technologies by streamlining administration of program funding and consolidating management of competitive awards. The former Renewable Implementation and Support activities have been given stronger focus by inclusion in the Weatherization and Intergovernmental Program.

The Intergovernmental Activities subprogram receives appropriations from both the Energy and Water Development and the Interior and Related Agencies subcommittees. Interior activities focus on energy efficiency measures, while Energy and Water Development activities focus on maintaining working relationships with international and Native American tribal governments that inform and assist consumers with renewable and efficient energy options.

In FY 2004, we request $12,500,000 for Intergovernmental Activities, $2.307 million less than our FY 2003 budget request.

  • The International Renewable Energy Program promotes clean U.S. exports, expanding the market of U.S. industries and reducing the cost of energy to our trading customers while improving their environment, reducing air and water pollution and greenhouse gas emissions, and creating new jobs. In FY 2004, we request $6.5 million for international activities (the same level of funding as our FY 2003 request).

  • The Tribal Resources Program provides assistance to Native American Tribes and Tribal entities in assessing energy resources, comprehensive energy plan development, energy technology training, and project development. In FY 2004, we request $6.0 million to assist Tribes in ways to use renewable energy technologies on Tribal lands. Funds will be awarded competitively.

The U.S. Country Studies Program has completed its mission of showing how the U.S. could cost-effectively reduce global greenhouse gas emissions through energy efficiency and renewable energy exports and cooperative agreements with other countries. The funding has been shifted to support Administration initiatives such as the Energy Efficiency for Sustainable Development and the Global Village Energy Partnership Initiatives announced at the World Summit for Sustainable Development. DOE expects to leverage these investments with loans and private investments. The goal is to attain significant energy savings and environmental and quality-of-life improvements for the host countries and their governments and citizens.

Electricity Reliability

Electricity Reliability provides funds for our Distributed Energy and Electricity Reliability Program. This Program leads a national effort to develop a flexible, smart, and secure energy system through advanced technologies that improve capacity utilization of the transmission and distribution system and through tools that provide real-time information to system operators. This Program offers solutions that bridge both the supply- and demand-sides of the energy equation and the need to upgrade our electric energy infrastructure.

The National Energy Policy and the follow-up National Transmission Grid Study (NTGS) published in May 2002 identified critical needs to modernize the nation's electric delivery system. This budget initiates key responses to the 51 recommendations of the Grid Study including bottleneck assessment, interaction with FERC on standard market design and critical research and development needs. The FY 2004 program consists of four main areas: High Temperature Superconductivity (HTS), Transmission Reliability Research, Distribution and Interconnection, Energy Storage Research, and Renewable Energy Production Incentive.

In FY 2004, we request $76,866,000 for Electricity Reliability, $360,000 more than our FY 2003 budget request.

For the HTS program, we request $47.838 million in FY2004 to develop applications of superconducting materials for the electricity delivery system. High temperature superconducting materials can be used to make wire conductors that are capable of carrying more current than existing conductors while having virtually no electric line losses of energy. The lack of electrical resistance of HTS materials makes it possible to have super-efficient generators, transformers, and transmission and distribution cables that reduce energy losses by half while using equipment that is about one-half the size of present electrical systems.

Transmission system operations have been made more complex by the growing volume of wholesale power transactions. As a result, data collection and visualization tools for utility planners and system operators are required that boost diagnosis and response times and increase the efficiency of market operations. The Transmission Reliability activity has developed and installed prototype voltage and frequency monitoring and visualization tools that allow transmission operators to immediately recognize and correct system problems. Other reliability tools are being installed, such as prototype satellite-synchronized devices that afford operators a real-time view of system conditions, provide information for reliable operation of the grid, and enable more efficient operation of competitive electricity markets. In FY 2004, we request $10.720 million to expand R&D on grid monitoring, data collection, and visualization tools.

The Transmission Reliability R&D subprogram request is proposing a new initiative in FY 2004 - the National Transmission Infrastructure (NTI) Initiative, with requested funding of $3.0 million. This initiative responds to the NTGS. The NTI Initiative addresses the technical and market-related recommendations in the NTGS that call specifically for DOE actions. Actions include "national-interest" transmission lines assessment, and advanced technologies for relief of transmission congestion, including sensors, monitoring and control for real time operation, advanced conductors, analysis of new system configurations and dynamics, and demand response. In addition, increased emphasis will be placed on field validation and testing and on providing more technical assistance to states and regions on topics such as regional resource and transmission planning.

Interconnection, communications, and control systems are needed to allow for a more "plug & play" design that can revolutionize energy markets and create new products and services for industrial, commercial, and governmental consumers who are interested in hassle-free distributed energy solutions. The Distribution and Interconnection (formerly DER Electric Systems Integration) activity is developing standards, conducting tests, and performing analysis for the interconnection and integration of distributed energy technologies for customers and electric distribution systems. It includes activities to develop the microgrid concept, to analyze the impact of high levels of penetration of distributed energy devices on the distribution system, and to address technical, institutional, and regulatory barriers to the expanded use of distributed energy resources. In FY 2004, we request $7.249 million for this Subprogram.

The Energy Storage Research activity addresses important challenges in the efficient operations of electric generation, transmission, and distribution systems. As a peak shaving tool during times of transmission overload, or during price peaks, energy storage allows more efficient allocation of energy resources without necessarily producing additional emissions. Energy storage systems can be used to provide back-up power and power quality support to consumers, potentially saving billions of dollars in downtime costs, damaged equipment, and disrupted operations. In FY 2004, we request $5.0 million for Energy Storage Research activities to support higher priority Transmission Reliability research and development, and take advantage of potential synergies with expected developments under the Vehicle Battery Program, which significantly increased its funding request for FY 2004.

The Renewable Energy Production Incentive Program stimulates electricity production from renewable sources owned by States or smaller private sector groups. In FY 2004, we request $4.0 million, the same funding level as our FY 2003 budget request.

Departmental Energy Management Program (DEMP)

DEMP targets services at DOE facilities to improve energy and water efficiency, promote renewable energy use, and manage utility costs in facilities and operations. In FY 2004, we request $2.3 million for DEMP activities, $700,000 less than our FY 2003 budget request. DEMP will audit facilities to identify energy conservation opportunities; provide funding for best practices identification and dissemination; and accomplish energy conservation retrofits through direct funding and alternative financing.

National Climate Change Technology Initiative (NCCTI)

In response to the President's commitment of the United States to develop a sensible, science-based approach to the issue of climate change, facilitate progress toward achieving climate change goals, near-term and long-term, and implement the President's National Climate Change Technology Initiative, the Department has requested in FY 2004 a total of $40 million for the NCCTI Competitive Solicitation program. Funding is requested in four R&D program accounts, as follows: Energy and Water Development: EERE (Energy Supply - $15 million) and NE (Energy Supply - $2.3 million); and Interior and Related Agencies: EERE (Energy Conservation - $9.5 million) and FE (Fossil Energy R&D - $13.2 million).

These funds will be used to support a NCCTI competitive solicitation aimed at exploring concepts, technologies and technical approaches that could, if successful, contribute in significant ways to: (a) future reductions in or avoidances of greenhouse gas emissions; (b) greenhouse gas capture and sequestration (permanent storage); (c) capture and conversion of greenhouse gases to beneficial use; or (d) enhanced monitoring and measurement of greenhouse gas emissions, inventories and fluxes in a variety of settings.

The NCCTI competitive solicitation is intended to spur innovation and accelerate technical progress on climate change technology development. The competitively selected research will complement DOE's existing portfolio of climate change-related R&D activities, and will be consistent with their missions, goals and objectives. The Climate Change Technology Program will manage the NCCTI competitive solicitation.

Facilities and Infrastructure

The Facilities and Infrastructure budget addresses capital investments at two DOE laboratory sites: the National Renewable Energy Laboratory (NREL), and Oak Ridge National Laboratory (ORNL).

NREL is the Nation's premier laboratory for renewable energy R&D. It also works to improve energy efficiency, advance related science and engineering, and facilities technology commercialization. In FY 2004, we request $4.2 million for operating expenses.

For ORNL in FY 2004, we request $750,000 to complete the design of a new multistory building of approximately 52,000 square feet to provide facilities for EERE R&D activities. This building will be a state-of-the-art facility designed to operate as a demonstration of energy efficiency technology. Energy Star certification will be sought for applicable portions of the building.

FY 2004 funding is requested to award the Architectural-Engineering contract for the project design and to provide project management. This budget provides half of the requested amount for Project Engineering and Design. Because industry will directly benefit from this facility, we are requiring 50 percent industry cost share for all phases of the project, including building design, as recommended in the National Transmission Grid Study. The project also is consistent with the ORNL Strategic Facilities Plan and complementary to the Facilities Revitalization Project of the DOE-ORNL Office of Science initiative to modernize their national laboratories.

Program Direction

Program Direction provides the federal staffing resources as well as associated properties, equipment, supplies and materials required for supporting the responsive management and oversight of programs. Program Direction also funds support service contractors, equipment, travel, and crosscutting activities.

In FY 2004, we request $16.577 million, $390,000 more than our FY 2003 budget request.

Conclusion

Mr. Chairman, Members of the Subcommittee, we welcome the challenge and the opportunity to play a vital role in this Nation's energy future and to support our national security.

This completes my prepared statement. I would be happy to answer any questions you may have.