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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
Hearing on the FY 2003 Energy Supply Budget Request


April 18, 2002


Introduction

Mr. Chairman and members of the Subcommittee, I appreciate the opportunity to testify before you today on the President's FY 2003 budget request for the Office of Energy Efficiency and Renewable Energy (EERE).

This budget request is our first since the release of the President's National Energy Policy (NEP)-a balanced, comprehensive strategy that recognizes the importance of energy efficiency and renewable energy. A majority of the 105 recommendations in the National Energy Policy document-54 to be exact-pertain to the importance of improving America's energy efficiency and expanding our use of clean, renewable energy sources. Some of these recommendations provide direction for EERE's programs.

EERE's budget request is split, as you know, between the Energy and Water Development and Interior Appropriations Bills. Our overall budget request for FY 2003 is $1.31 billion, up $10.2 million over the amount appropriated last year. For our Energy and Water Development programs in FY 2003, we request $407.7 million, a 5.6 percent increase above FY 2002 comparable appropriations of $386.4 million, and a 47 percent increase compared with our FY 2002 request of $276.7 million.

However, more important than how much we propose to spend on these programs is the fact that we are working to achieve more from them. As we developed this budget we were driven by some very fundamental questions. For example, what public benefits do we expect to achieve with the expenditure of these taxpayer dollars? How can we better measure success in pursuit of those public benefits? How can we leverage federal dollars through partnerships with States, communities and the private sector to achieve greater success? We grappled with these questions in several ways:

  • First, in response to recommendations in the President's National Energy Policy, we undertook a Strategic Program Review to review historical performance of EERE programs, and propose appropriate funding for those that were performance-based and modeled as public-private partnerships. This extensive review was accompanied by a series of public meetings held across the country. Our review identified activities that should be expanded, activities that have come to the end of their useful lives and should be terminated, activities that should be refocused, and activities that require "watch list" scrutiny to ensure they advance effectively. This review has driven many of the shifts you will see in our FY 2003 budget.

  • Second, we evaluated the results of an external, retrospective review by the National Academy of Sciences (NAS) designed to determine whether the benefits of our programs have justified the associated public expenditure. The NAS found that a number of our Research, Development and Demonstration (RD&D) programs have yielded significant economic and environmental benefits, new technological options, and important enhancements to engineering and scientific knowledge in a number of fields. The NAS also offered recommendations that will improve our methods for estimating program benefits. We have taken these recommendations seriously and are evaluating how to best implement them.

  • Third, as part of a pilot effort, we applied new evaluation criteria to our research and development programs in accordance with the President's Management Agenda. While only a pilot, the criteria helped us steer our R&D portfolio toward activities where there was a clear Federal role; a strong R&D plan; a competitive awards process; and a demonstration of results and potential for public benefit. We hope to improve the application of these criteria in the evaluation of our R&D portfolio as we move ahead.

  • Finally, we were driven by a challenge issued to us by Secretary Abraham to take a bolder approach to our work. Recognizing "our increasing dependence on energy from areas of the world that are periodically unstable," Secretary Abraham directed us to concentrate our efforts on programs that "revolutionize how we approach conservation and energy efficiency." He challenged us to "leapfrog the status quo and prepare for a future that, under any scenario, requires a revolution in how we find, produce and deliver energy." He challenged us to pursue "dramatic environmental benefits."

Some of the lessons we learned during our Strategic Program Review, along with the direction that has been provided to us by Secretary Abraham and the President's Management Agenda, have led me to propose a significant reorganization of EERE. Our Strategic Program Review told us that we needed to strengthen our focus on programs and program management. The President's Management Agenda challenged us to flatten the organization to make it more responsive; to focus on results, not process; to link budget with performance; and end overlapping functions and inefficiencies. When our new organization is in place and fully functional, it will enhance our ability to ensure the most judicious use of the taxpayer dollars entrusted to us to achieve results.

FY 2003 Energy and Water Development Budget Request

For FY 2003, we request a $21.3 million increase above FY 2002 comparable appropriations. Mr. Chairman, I believe that the budget request I am presenting today will move us forward in meeting our program goals and those of the NEP to modernize our energy infrastructure, to increase the development and clean use of our Nation's domestic energy supplies, and to improve the overall efficiency in the way our country uses energy. For example, some of our goals are:

  • Biomass R&D will reduce the production cost of cellulose-based ethanol from about $1.40 per gallon today to $1.20 per gallon by 2005, and to $1.07 per gallon by 2010.

  • Hydrogen R&D will demonstrate a conversion technology that will lower the cost of large-quantity hydrogen production from natural gas, from $3.75 per kilogram in 2000 to $2.50 per kilogram in 2006.

  • Wind Energy R&D activities will provide the technologies to reduce the cost of wind powered electricity generation in Class 4 wind areas (13 mph annual average) from 5.5 cents per kilowatt-hour in 2002 to 3 cents per kilowatt-hour by 2010.

  • Distributed Energy Systems R&D activities will increase the share of new distributed energy electricity-generating capacity from 5 percent in 2000 to 7 percent in 2005.

  • High Temperature Superconductivity R&D efforts will lead to the development of HTS wire capable of carrying 100 times the power of comparable copper wire - with zero electrical resistance - by 2007.

Mr. Chairman and members of the Subcommittee, I will now briefly discuss the portfolio of Renewable Energy Resources programs within the Office of Energy Efficiency and Renewable Energy.

Integrated Biomass R&D

In FY 2003, we are requesting $108.9 million for this restructured activity. In the Energy and Water Appropriations, we request $86 million, a decrease of $2.5 million from FY 2002 comparable appropriations, but an increase of $4 million compared with our FY 2002 request. The remaining $22.9 million (i.e., Agriculture $8.3 million; Forest Products $1.0 million; and Crosscutting Combustion Gasification $13.6) has been requested from Interior Appropriations.

Biomass is a priority for the Administration as reflected in the NEP. Frankly, Mr. Chairman, we have found that our biomass program has lacked focus in the past. In response, we have proposed unifying all biomass activities under one office and have worked to set integrated priorities across all projects including biofuels, biopower, and biobased products. Research opportunities and priorities were identified by using the draft industry-developed Biobased Products and Bioenergy vision and roadmap. The criteria used to choose new program direction include: activities requiring a strong government role; activities that can achieve a significant reduction in foreign oil dependence; activities that accelerate the biorefinery concept; and critical path activities to achieve key enabling technology goals. The result of this process is a portfolio that is balanced across three major areas: Gasification, Fuels and Chemicals, and Conversion and Processing. As with all our programs, we would like the R&D that we support through the Integrated Biomass program to be competitively awarded to the maximum extent possible.

We are driven by our vision of the widespread operation of an integrated industrial biorefinery and our goal to reduce America's dependence on foreign oil. We already see the results of our efforts: we have closed dozens of projects since FY 2001; we are de-emphasizing biomass co-firing with coal and lignin routes to ethanol, and we are moving away from our work on plant sciences and feedstock production. Instead we are concentrating our overall funding on cellulosic ethanol, gasification, and biobased chemicals. Our FY 2003 activities are:

  • In Biopower Systems, we request $33.0 million, a $6.2 million decrease from FY 2002 comparable appropriations ($4.8 million below our FY 2002 request), to support the following research and development activities:

    • Advanced gasification and biosynthesis gas technology suitable for application in power generation (both large-scale and distributed-energy systems), in an integrated biorefinery, and for the production of chemicals;

    • Biomass (forest and agricultural residues) gasification systems with capacities up to 1,000 dry tons per day at several locations to illustrate their applicability in locations with a variety of characteristics;

    • The development, field-testing, and optimization of the design of prototype integrated biomass gasification/fuel cell systems, and the establishment of their costs; and,

    • The implementation of demonstration facilities for biorefining with multiple outputs: power, fuels, chemicals and products.

  • In Biofuels, we request $53.0 million, a $4.2 million increase from FY 2002 comparable appropriations ($8.8 million above our FY 2002 request), to:
    • Demonstrate integrated enzymatic hydrolysis and fermentation of cellulosic feedstocks to fuel and chemicals.

    • Support the development of novel harvesting equipment design, storage and logistics for agriculture wastes reducing the feedstock cost for the production of fuels and chemicals.

    • Initiate validation of multiple use feedstocks for renewable diesel production.

    • Contribute to the implementation of demonstration facilities for biorefining with multiple outputs: fuels, power, chemicals and products.

Geothermal

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 is focusing primarily on exploration and drilling research because better understanding of geothermal resources and improved analytical methods of exploration will enable industry to locate and characterize new geothermal fields at greatly reduced risk.

  • In FY 2003, we request $26.5 million for geothermal program activities, a decrease of $799,000 from FY 2002 comparable appropriations ($12.6 million above our FY 2002 request). At this funding level, our activities will include:

    • continuing core laboratory and university research to better understand complex geothermal processes and to develop technology to produce geothermal resources economically;

    • continuing development of Enhanced Geothermal Systems to double the amount of accessible and economically-viable geothermal resources in the West;

    • continuing research on enhanced detection and mapping efforts and advanced drilling technology to (1) expand our domestic geothermal resource base, (2) improve the success rate in exploratory drilling from 20 percent in 2000 to 40 percent by 2010, and (3) reduce the costs of drilling wells by 50 percent by 2008; and

    • continuing to reduce the costs of heat conversion and power systems.

Hydrogen

The Hydrogen Program supports the research, development and validation of hydrogen production, storage, and utilization technologies that will foster the transition to a hydrogen economy. Hydrogen is a nearly ideal energy carrier. It can be oxidized in a fuel cell, combusted in a conventional engine, or simply burned. When used in this manner, the only by-product is water. Hydrogen can be produced from either fossil or renewable resources. As a transportable fuel, it has greater flexibility than electricity for vehicle and remote area use.

The Hydrogen Program works with industry to improve efficiency and lower the cost of technologies that produce hydrogen from natural gas and renewable energy resources. 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. The Hydrogen Program's R&D activities also strongly support the Administration's recently-announced FreedomCAR Initiative, which, in the long run, will help to end U.S. dependence upon foreign oil by developing technologies that will ultimately result in vehicles requiring no oil, and that emit no harmful pollutants or greenhouse gases.

  • In FY 2003 we request $39.9 million for the Hydrogen Program, an increase of $10.7 million above FY 2002 comparable appropriations ($13 million above our FY 2002 request). Activities will include:

    • Continuing to improve the efficiency and lower the cost of fossil-based and biomass-based hydrogen production processes to achieve $12 - 15 per million Btu for pressurized hydrogen when reformers are mass-produced by 2010 (compared to today's price of $18-24 per million Btu).

    • Continuing development of other advanced reformer and refueling station components that can reduce the cost of hydrogen production by an additional 25 percent, to achieve $9-12 per million BTU for pressurized hydrogen when reformers are mass-produced by 2015.

    • Continuing to develop and demonstrate safe and cost-effective storage systems for use in stationary distributed electricity generation and vehicle applications in urban Clean Air Act non-attainment areas.

Hydropower

In the case of hydropower, already an abundant and relatively inexpensive source of electricity, the program focuses on making hydropower plants more compatible with aquatic life and other water resource users through "fish-friendly" turbines and reducing changes in the quality of dissolved gases in downstream water. In addition, the Hydropower Program improves the technical, economic, and environmental performance of the Nation's abundant, in-place hydropower resources through collaborative research and development with industry and other Federal agencies.

  • In FY 2003, we request $7.5 million for the Hydropower Program, an increase of $2.5 million above FY 2002 comparable appropriations and our FY 2002 request. The request will accelerate the development of a commercially viable turbine technology capable of reducing the rate of fish mortality to 2 percent or lower by 2010. This is compared to turbine-passage mortalities of 5 to 10 percent for the best existing turbines and 30 percent or greater for some turbines. This environmentally-friendly turbine technology should also help reverse the decline in hydroelectric generation, our largest renewable energy resource.

Solar

The EERE Solar Energy Technologies Program supports a range of applications including on-site electricity generation, and thermal energy for space heating and hot water. A primary objective of the program is to compound the value of solar by putting it at the point of use, making it an integral part of super efficient, state-of-the-art residential and commercial buildings. Efforts to reduce building energy consumption through energy efficiency and to provide on-site renewable energy production could lead to attractive and affordable "zero-net-energy buildings" where all energy needs are met by renewable energy sources.

  • In FY 2003, we request $87.6 million for the Solar Energy Technologies Program, a decrease of $1.8 million from FY 2002 comparable appropriations ($38.3 million above our FY 2002 request). Our FY 2003 request includes: $73.7 million, an increase of $2.1 million, for Photovoltaics; $12.0 million, an increase of $7.3 million, for Solar Buildings; and $1.9 million, a decrease of $11.2 million, for Concentrating Solar Power. The FY 2003 activities are as follows:

    • Photovoltaics research will focus on increasing domestic capacity by lowering the cost of delivered electricity and improving the efficiency of modules and systems. Fundamental research at universities will be increased to develop non-conventional, breakthrough technologies while both laboratory and university researchers work with industry on large volume, low cost manufacturing, including increased deposition rates, improved materials utilization and characterization techniques, and materials recycling.

    • The Solar Buildings request emphasizes developing the "zero-net-energy building" concept, a concept linking energy efficiency and renewable energy integration into building designs. Reducing the cost of solar water heating by using light-weight polymer materials to replace the heavy copper and glass materials used in today's collectors is also underway.

    • The Concentrating Solar Power program will complete the evaluation of the 25 kW dish systems at the University of Nevada at Las Vegas and terminate all remaining activities. The decision to end these concentrating solar activities is based upon the results of the external Renewable Power Pathways review conducted by the National Research Council; the recently-completed EERE Strategic Performance Review; and the R&D Investment Criteria issued by the Office of Management and Budget.

Wind

Advanced wind turbines are currently providing cost-competitive power in high wind speed (Class 6) areas. As a result, the Wind Energy Systems Program is shifting its focus to new and different turbine advances that will allow for competitive wind development in the more prevalent or common lower wind speed (Class 4) areas. The Wind Energy Systems Program seeks to provide economic, environmental, and energy security benefits by expanding the domestic use of wind energy and by fostering a world-class wind energy industry.

  • In FY 2003, we request $44.0 million for Wind Energy Systems activity, an increase of $5.4M compared to FY 2002 comparable appropriations ($23.5 million above our FY 2002 request). The program will:

    • Accelerate the Low Wind Speed Technology (LWST) project that will produce cost effective wind technology for Class 4 wind resource areas, making wind energy more economically attractive in areas of the Nation closer to population and load centers. Such technology has the potential to expand the economically-accessible U.S. wind resources 20-fold.

    • Increase its research into distributed wind systems. Distributed wind systems (typically small turbines sized less than 100 KW) provide a valuable alternative source of energy for a variety of applications, such as for farmers, homeowners, and in isolated villages. Smaller turbines also produce useful energy in lower speed wind resources, and thus are potentially cost-effective in more locations. Due to their low capital cost, distributed wind systems are also more available to individual landowners. The Program is funding research and development on distributed wind systems and applications through public/private partnerships following the successful model of utility-scale technology.

Electric Energy Systems and Storage

The Electric Energy Systems and Storage program has two components: the High Temperature Superconductivity Program (HTS) and Distributed Energy Systems (DES).

DES activities are key components of a larger Distributed Energy Resources (DER) Program to lead a national effort to develop a flexible, smart, and secure energy system by integrating clean, efficient, reliable, and affordable distributed energy technologies.

EERE's HTS and DER programs together are tackling the power-related issues confronting the Administration's goals of modernizing energy conservation and modernizing our energy infrastructure. The HTS Program seeks to reduce the electricity losses associated with moving electricity within largely urban areas, as well as improving the efficiency of large electric motors and generators. The DER Program is composed of five major activities, three of which are funded by Energy and Water Development appropriations: energy storage system research and integration; transmission reliability; and DER electric systems integration.

For FY 2003, our Electric Energy Systems and Storage request of $70.4 million, a decrease of $249,000 below FY 2002 comparable appropriations ($18.7 million above our FY 2002 request), will support the following activities:

  • For the HTS program, we request $47.8 million in FY 2003, an increase of $15.5 million above FY 2002 comparable appropriations ($11 million above our FY 2002 request), to develop applications of superconducting materials to the electricity infrastructure. The lack of electrical resistance of HTS materials makes possible electrical power systems, super efficient generators, transformers, and transmission cables that reduce energy losses by half and allow equipment half the size of present electrical systems.

    • At this level, we will complete final testing and evaluation for the prototype 100-MW, 3-phase, HTS cable installed in downtown Detroit. We will complete final testing and evaluation for the prototype reciprocating magnetic separator and the HTS-bearing, energy-storage flywheel and begin construction of new prototypes of generators, power cables, and other HTS systems under cost-shared projects with industrial consortia. The national laboratories and industry will demonstrate the capability to reproducibly fabricate 10-meter lengths of Second Generation Wire that carry 50 amps of electricity and 1-meter lengths that carry 100 amps of electricity.

  • The DES program includes three activities: (a) Energy Storage Research; (b) Transmission Reliability; and (c) Electric Systems Integration.

    • The Energy Storage Research activity addresses important challenges to the delivery of electricity. As a peak shaving tool during times of transmission overload or during price peaks, storage allows more efficient allocation of energy resources without producing additional emissions. Storage has the potential of saving U.S. industry many billions of dollars in downtime costs by improving the customer's power quality. In FY 2003, we request $7.6 million for Energy Storage Research activities, a decrease of $1.5 million from FY 2002 comparable appropriations ($ 0.7 million below our FY 2002 request).

    • The Transmission Reliability activity has developed and installed prototype voltage and frequency monitoring and visualization systems that allow transmission operators to immediately recognize and correct system problems. Other prototype satellite-synchronized reliability tools are being installed that afford operators a real-time view of system conditions, provide information for reliable operation of the grid, and for efficient operation of competitive electricity markets. In FY 2003, we request $7.7 million, a decrease of $10.5 million from FY 2002 comparable appropriations ($3.2 million above our FY 2002 request).

    • The DER Electric Systems Integration (formerly Distributed Power) activity is developing standards and conducting tests and analyses for the interconnection and integration of distributed generation technologies at the customer site and into the electric distribution system. The activity is developing the microgrid concept to analyze the impact of high penetrations of distributed generation on the distribution system, and supporting removal of other technical, institutional, and regulatory barriers to full distributed generation technology deployment. In FY 2003, we request $7.2 million, a decrease of $3.5 million from FY 2002 comparable appropriations ($2.7 million above our FY 2002 request).

Renewable Support and Implementation

The Renewable Support and Implementation activity is comprised of five elements for which we request $23.8 million, an increase of $10.1 million above FY 2002 comparable appropriations ($14.3 million above our FY 2002 request). These elements are:

  • The Departmental Energy Management Program (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 2003, we request $3.0 million for DEMP activities, an increase of $1.5 million above FY 2002 comparable appropriations ($2 million above our FY 2002 request). The request will allow two to three renewable energy or other emerging energy technology projects to be funded. Wind, geothermal, biomass or solar projects will be evaluated and selected from applications submitted by DOE field offices.

  • The International Renewable Energy Program promotes the export of clean U.S. technologies that contribute to global environmental improvements in greenhouse gases and to local air and water pollution. In FY 2003, we request $6.5 million for international activities, an increase of $3.6 million above FY 2002 comparable appropriations ($4 million above our FY 2002 request). In FY 2003, the $3,660,000 increase is to support the Clean Energy Technology Exports (CETE) initiative. The CETE approach will initiate two types of international activities: industry-initiated export projects, and "showcase" projects that demonstrate the CETE vision of coordinated activities among the USG agencies with export responsibilities. Priority will be given to advancing the U.S. recommendations in the National Energy Policy. We anticipate major leveraging of these funds with those of other agencies and U.S. industry.

  • The Renewable Energy Production Incentive Program stimulates electricity production from renewable sources owned by States or smaller private sector groups. In FY 2003, we request $4.0 million, an increase of $213,000 above FY 2002 comparable appropriations (approximately equal to our FY 2002 request).

  • The Indian Renewable Energy 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 2003, we request $8.3 million, an increase of $5.5 million above FY 2002 comparable appropriations (no funds requested in FY 2002), to begin assisting Tribes in ways to use renewable energy technologies on Tribal lands. Funds will be awarded competitively.

  • The Renewable Program Support includes activities that promote the use of renewable technologies in under-served regions of the United States. In FY 2003, we request $2.0 million, a decrease of $781,000 from FY 2002 comparable appropriations (same as our FY 2002 request).

National Renewable Energy Laboratory (NREL)

The National Renewable Energy Laboratory (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 facilitates technology commercialization. For 25 years, NREL research has focused on developing technologies that harness the energy in natural resources in order to provide consumers with clean, non-polluting energy alternatives to conventional fossil fuels. Since its inception, NREL's research has won 31 prestigious R&D 100 awards. In FY 2003, we request $4.2 million for operating expenses, an increase of $130,000 above FY 2002 comparable appropriations (same as our FY 2002 request). This year we are also requesting $800,000, the same as last year's appropriated level, to complete the design of a research laboratory and office space for a Science and Technology Facility at NREL.

Program Direction

Program Direction funding provides Federal staffing resources as well as associated properties, equipment, supplies and materials for the Department's Renewable Energy programs. In FY 2003, we request $16.9 million, a decrease of $2.6 million from FY 2002 comparable appropriations ($2.3 million below our FY 2003 request).

Conclusion

Mr. Chairman, the President has challenged us by setting forth a long-term strategy that integrates energy, environment and economic policy. The Office of Energy Efficiency and Renewable Energy will continue to build on our successful technology research, development, demonstration and deployment activities to meet the recommendations of the National Energy Policy. Our budget submission gives us the chance to play a major role in this Nation's energy future and to make a difference in the lives of our citizens. We welcome this opportunity.