The Energy Independence Implications of the Auto Bailout Proposal (Part 2 of 2)

The Energy Independence Implications of the Auto Bailout Proposal (Part 2 of 2)


[Official GPO Transcript] [The Chairman] I apologize to our witnesses.
The roll call took an additional 15 minutes that had not
been anticipated. Let me ask Ms. Floyd, in terms of wind potential,
there are stories that there could be upwards of 4,000
new megawatts added this year to the national grid. Do you
agree with that number? [Ms. Floyd] I just want to remind the Chairman
that I am–I was a wind developer in the early ’80s and
I now invest in a very broad range of technologies. So I probably
don’t have those statistics at hand. I did mention in
my testimony that in the State of Washington last year they added
a thousand megawatts so certainly I think that’s in the
ballpark. [The Chairman] What is Texas going to add
this year? [Mr. Sloan] Just this year, 2000 megwatts,
about $3 billion worth of wind farms. [The Chairman] So Washington State was 1000.
Texas is 2000. There were only 11,000 megawatts of natural
gas added last year to the whole national grid. Only 600 megawatts
of coal, no nuclear, and no oil. So what do you think
is reasonable then, Ms. Sloan? What could we expect from Texas
this year? Did you say 2000 megawatts? [Mr. Sloan] Approximately 2000 megawatts this
year, similar numbers are certainly available going into
the future. A key limitation is going to be infrastructure.
There is more investor interest. There’s literally 40,000
megawatts of wind projects that are evaluating interconnection
to the system. [The Chairman] Right now? [Mr. Sloan] Right now. [The Chairman] So there could be upwards of
5,000 megawatts a year being added in 2012 if the interconnection
transmission issues are resolved. [Mr. Sloan] If the country were to get very
serious about accommodating those resources, that the market
wants to add, it could be very high numbers. [The Chairman] The interesting thing about
that is the nuclear industry after 50 years has 100,000
megawatts and they haven’t added any new megawatts in a generation.
So here comes winds adding upwards of 4000 this year and
that’s nationally, but that seems like a conservative estimate,
given what we’re hearing about Washington State and Texas,
that the nation might average 8000 or 10,000 megawatts a year being
added in another five years and at that pace within 10 years,
it would match the nuclear industry. It doesn’t have the same
ability to produce it on a regular basis, but that’s quite a
story. [Mr. Sloan] If I can, there’s the capability,
I think, of the industry to gear up to do that, but the
two key challenges will be infrastructure and you have to proactively
look ahead. You will need the transmission lines to get
from those windy areas to markets where people can use it.
And also, is the supply chain, if you will. You know manufacturing
the wind turbines and components which has been pointed
out is not done very much today in the United States, but
if the country were to get very serious with an RES, you would
see, I think, an enormous investment in manufacturing of those
components. [The Chairman] Yes, Ms. Floyd. [Ms. Floyd] And could I just add a point on
infrastructure. One of the areas that we’re investing in is
quote unquote Smart Grid. And whether we like it or not, this
country is going to have to invest in the infrastructure. For
the last two decades, the amount of investment in the grid has declined
dramatically and so just from a reliability standpoint,
never mind being able to handle this additional wind generation
and other distributed generation, there is going to
have to be an investment and an upgrade in that infrastructure
to provide the kind of reliability that customers demand. [The Chairman] Now, wind, as a result has
a chance to really make a big difference in terms of what our
national needs will be for new electrical generation between now
and the year 2030. If you project, let’s just say it’s 5,000
a year, for 23 years, you have 115,000 megawatts by 2030 and nuclear
only has 100,000 today. But if you make it 10,000 per year,
it really picks up nationally now. Texas at 2000 is at the dawn
of the era, you’re saying almost, so Texas might start adding
even more per year and so you do have this real likelihood that
there could be upwards of 200,000 megawatts of wind in the
United States by the Year 2030. Is that realistic? Is that possible, if we
make the right transmission decisions? Is there a limitation
on how much wind we can produce? [Mr. Sloan] I will say there certainly is
a limitation, but we will not reach it for a long time. If you
look at the potential of wind, it is virtually unlimited.
Just in the State of Texas, we literally have sufficient sites
to support 500,000 megawatts of wind and the good ones, there
was recently a major study, in fact, we’re in the middle of it
in Texas right now called competitive renewable energy zones
and they identified 150,000 megawatts of quality sites. They’re
available, but it’s going to be limited in your ability to use
it, use it locally, but also export it to other areas where they
can use it. Texas has always embraced the idea that it
is an energy producer. There’s other states that take that
on. You mentioned the NIMBY issues and BANANA issues. In Texas
and other producing regions, they can build large-scale
projects, so—- [The Chairman] I understand that, but I mean
Texas hasn’t always embraced it. I mean TXU was going to
build 11 coal-fired plants and so that’s clearly a lagging indicator
of where the future is going. And now, with the new owners
they’re moving in a different direction. I don’t know if they’re
embracing renewables. They’re saying they can get by
with only three coal-fired plants. But to the extent to which
Texas is now becoming the leader, and showing the way,
I’d just like you to elaborate and then I’ll allow the other witnesses
to answer. I read a story in The Washington Post back
in March. It was a story about West Texas, and a family in
West Texas that was now allowing these turbines to be placed on
their farmland and while they kind of missed the farmland and
they were taking photographs of what it looked like, with one
wind turbine per acre, they were already up to 23 wind turbines
and the story said that some farmers get paid upwards of
$10,000 a turbine. That might be on the high side. But even let’s
say $5,000, $3500, you put up a 100 of those turbines
on your farm and you can plug it into the grid, you’ve got a pretty
stable source of income for your children, for your grandchildren
out into eternity really in terms of providing electricity. So is that really what’s happening? Is this
catching on like a fever out in West Texas with farmers
and ranchers, put those wind turbines on my land? [Mr. Sloan] Absolutely. It is a boom, just
like the oil boom in the ’30s and ’50s in Texas. There’s essentially
a frenzy going on to get in the wind business. There’s
this limitation of the infrastructure, but that is being dealt
with by the State of Texas through this process. [The Chairman] Tell me about, what effect
did the Renewable Electricity Standard that Governor Bush put
on the books back in ’97 or so, have on this wind explosion?
Is there a relationship between the Renewable Electricity
Standard that he signed into law and this phenomena? [Mr. Sloan] Absolutely. If you think about
it, there’s other places in the country that are as windy as
Texas. We’ve got good wind sites, but other places, South Dakota
is an example, maybe even has better wind sites. Everyone
had availability to the production tax credit, the federal incentives,
yet Texas really took off and it was because of the
quality of the state incentives. It was laid out in a pretty simple
fashion, the RES in Texas. And importantly, all of the stakeholders
got involved. Originally, there was hesitance from a lot
of the utilities. They were very skeptical. But when
you had public polls where the utilities’ customers were
saying listen, we really want more renewable energy, everyone
got on board. The political leaders, the electric utilities,
and other stakeholders, the industry and consumer and
environmental groups, and it really was a recipe to make
it all move forward. So that’s the important thing about an RES.
It is a catalyst to get action going. [The Chairman] Mr. Hobson. [Mr. Hobson] This is exciting. It’s exciting
stuff. It’s great that we’re able to take advantage of
wind resources in the country where they exist, but I think
it’s important to keep this in context. We operate in this country
and we demand as consumers of electricity an electricity
system that operates at 90 plus percent reliability. The best wind
turbine in the very best wind site has an availability probably
no more than 40 percent of the time. And so when we reach
a point in this country where wind turbines are called on
to do more than just supplying energy when they can, which is what’s
going on today, when we get to the point where we want to
rely on wind turbines as a part of the backbone of the system, we
will have to put in place traditional generation technologies
that will be able to operate during those times when wind is not
available. So for instance, if I have a load forecaster
who tells me next year we’re going to need 1,000 additional
megawatts in Georgia and we decide that we’re going to
do that with wind, I will have to build right beside it another
1,000 megawatts of say gas-fired combustion turbines or combined-cycle
units because I can’t count that wind as capacity.
It won’t be available when I need it and so I have to
make sure that my 90 percent reliability threshold is met and you
can’t do that with wind. [The Chairman] How is Texas handling that
issue, Mr. Sloan? [Mr. Sloan] These are issues that have come
up. We hear these all the time. And I will just point
to Europe. Europe already uses very high penetrations of wind.
Some countries, for instance, Denmark, in a single month earlier
this year the average energy was 35 percent coming from
wind power. So it can be done. I mean there’s physical examples
of how it can be done and I would actually argue that wind power
makes the electric system more reliable and the reason is because
utility planners do not count on it to be there for capacity.
It is an energy resource. So it’s there sometimes when you’re
not expecting it, it will be there. And an analogy would be
in this room you have lights. You have enough lights to make sure
that you can light this room, but if these lights go out, you
could probably open those shades behind and take advantage of
natural light. The natural wind resources, solar resources,
the fuel is free. And you–it’s almost sort of common
sense approach. Take what nature gives you and use your controllable
resources when you need to, to fill in the gaps. [The Chairman] Doesn’t wind have a higher
capacity factor than natural gas? [Mr. Sloan] Yes, it does, on average in this
country. One thing I want to see if I can clarify—- [The Chairman] And isn’t natural gas increasingly
going to become a problem because we’re going to be
importing it as liquified natural gas from more and more unstable
parts of the rest of the world. And so that is also a factor.
You have that instability as well and it does raise issues
there. Mr. Hobson. [Mr. Hobson] Mr. Chairman, as much as we would
like for it to be, any 40 percent capacity factor source
of generation cannot become the backbone of a 90 percent
plus reliable electricity system. [The Chairman] Can it become 15 percent of
it? [Mr. Hobson] Well, it can’t even really become
15 percent of it. He said it correctly. [The Chairman] You’re saying the Governor
of Colorado is heading for trouble having a 20 percent standard? [Mr. Hobson] No, no. Understand what I’m saying.
He said it correctly. If I have wind, if I have wind
resources, if I have enough capacity on the ground to meet my load
through traditional means and I have wind resources
that are available to me, sure, it makes a lot of sense to take
advantage of that free fuel when I can and not run another source
of energy. That makes sense. But I have to build the capacity
to make sure I can supply my customers when they call on
the demand. So my customers in essence will be paying
twice as much for generation, because if I put a wind turbine
on the ground, I’ve got to put a gas turbine on the ground as
well. But as long as we are developing wind resources as we are
now, for those areas where reliability is not the issue, I think
that’s terrific. I think that it becomes problematic when we
think we’re going to be building 40 percent capacity factor resources
to supply electricity for our customers. In a 90 percent
system, it’s just not going to happen. Now technology may get better. But where we
are right now, I can’t rely on a 40 percent capacity factor
wind turbine to supply my customers. [The Chairman] And how does Denmark do it,
Mr. Hobson? [Mr. Hobson] I’m sorry? [The Chairman] How does Denmark do it? [Mr. Hobson] I’m not familiar with Denmark. [The Chairman] Could you do me a favor? Could
you look at Denmark and then in writing, send back to
us your answer as to why we could not adopt a system like Denmark
in order to ensure that wind is incorporated, not at a 35 percent
or 25 percent, but at 15 percent level. If you could give
us that analysis, have your experts look at Denmark and tell
us what is different in their system from ours. [Mr. Hobson] We would be happy to do that. [The Chairman] Okay, that would help us. [Mr. Hobson] My suspicion would be one of
two things, Mr. Chairman. My suspicion would be that Denmark,
if you look at Denmark, they have a backbone electrical system
that can manage their needs and use the wind resources when
they are available. [The Chairman] Right. [Mr. Hobson] Or interconnections with other
countries. [The Chairman] Right. [Mr. Hobson] They have some source of power. [The Chairman] But we could do that, too.
I mean, the Southern Company, obviously unconstrained
by PUCA is across more and more states and so obviously you
when advertising, changes in laws is a way for you to interconnect
and have more efficiency across state lines, right? [Mr. Hobson] Sure, sure. [The Chairman] And of course, the more states
that are included in any grid is the more likely the
wind is blowing in some other state, you know? Another 500 miles
away, and that’s then going to be part of this interconnected
grid, so it doesn’t have to be, it doesn’t have to be
windy in all parts of a grid in order to get a 30, 40 percent. It
just has to be windy in parts of the grid in order to kind
of maintain that level of stability. And then I think statistically, you would
probably wind up in a situation where it is highly unlikely
to not be windy everywhere at the same time, you know? That
probably doesn’t happen very often anywhere as long as the
grid is interconnected and it is large enough. So
I guess what I’m saying is where there is a will, there’s a
way, and it just depends upon the, but again, analyzing Denmark
would be great because it seems to me that’s what you’re
saying, there’s an interconnection they can get it from other
places and if that’s possible, that would help us. Ms. Floyd. [Ms. Floyd] Yes, Mr. Chairman. I just want
to put my venture capital hat on and to say that, you know,
$2.4 billion of capital didn’t go into the status quo. And
so to be assured that there is money and investment going into
new energy storage technologies, that could be at a very
large scale, that there is investment going into when you talk
about overall wind potential. And again, there are many technologies.
We’ve talked a lot about wind and solar today, but looking
at wind turbines that are very efficient in moderate wind regimes,
not just the very highest wind regimes. So I just want, again, to remind the Committee
that there is new technology being developed that when
we invest, we expect there will be commercial product within
a year or two of that investment and a lot of money going into
energy storage. [The Chairman] Thank you. Mr. Foster, you had your hand up. [Mr. Foster] Yes, Mr. Chairman. I was going
to observe that my State of Minnesota has the distinction
of being the largest importer of electrical energy of any state
in the country. So we’ve looked at the development of the wind
resources in Minnesota, really, as an opportunity for promoting
a level of homegrown energy production and energy independence,
one of the themes of this Committee. But the largest source of Minnesota’s power
has been from the Canadian Manitoba hydro system, and in
my experience in talking about these issues in Minnesota, the
hydro systems provide themselves really as natural energy
storage locations for wind reserves, so that when wind resources
are being utilized, hydro systems can be in a sense
turned off and the energy stored that would otherwise have passed
through the hydro systems, and so it seems to me that
you’ve got built in to an awful lot of the energy systems in the
United States already, home grown storage facility for the
complimentary use of hydro with wind generation. [The Chairman] I mean, like Minnesota, New
England imports electricity from another country as well,
Canada. So we import. What would be their receptivity, for example,
of Minnesota to importing electricity from South Dakota if
they were able to exploit their wind resources there and the
transmission issues were overcome. Would that be something that
was consistent with the history of importing electricity from
Canada? [Mr. Foster] It certainly would in our state.
And then I obviously understand in this debate the sensitivities
that states have about importing energy from other
states, but that certainly has been our history of producing
electricity where it is cheap and where fuel sources were cheap
and then importing it. The thing that I have found
most exciting in terms of economic development is the degree
to which the growth of renewable energy really touches every state
in the country and every state has the potential for producing
its 15 percent renewables on its own, which is something
that didn’t currently exist under our current system of electrical
production, my home state of Minnesota being a prime example,
because until the development of efficient wind resources,
we never had the capacity to generate much of our own electrical
fuel. [The Chairman] Right. I mean, New England
is not too far different there. So I guess some states get
used to importing oil or any energy resource. Other states get
used to exporting it and don’t like the idea of importing anything
from anyone, but I think that is more of a personality
factor than it is something that can’t be dealt with as a market
issue. The Southern Company seems to want to avoid importing
any electricity into its region, but other regions
get used to it just out of necessity. I think that is a factor
as well. There are always agreements that can be worked
out. In grammar school, at least in Boston, we have
a chapter in every one of our geography books entitled Our Friends,
the Canadians. So we just learn how dependent we are going
to be upon the Canadians for so many things from the early
age, and we don’t even give it a second thought that this hydro
and all this natural gas coming down into our region. We
kind of accept it as part of our energy profile, at least my
31 years on the Committee. Mr. Reedy, can we go to the solar issue in
Florida? Mr. Hobson is talking about the clouds in Florida
and how it’s not as good as Arizona or New Mexico. Is that
true? [Mr. Reedy] No. No, sir. We do have less solar
resource in Florida. It’s a different kind of solar resource.
It’s diffuse. It has a large component of diffuse energy
as compared to direct sunlight and direct focused energy.
But photovoltaic panels respond very well to diffused energy. [The Chairman] Are there success stories in
Florida right now? [Mr. Reedy] There certainly are. We do have
our resource, when compared to the very best in the world
is about 85 percent of the resource say in Arizona. And Georgia
is something around 83 percent. I don’t call that limited and
I don’t call that inferior. That 83 percent is twice the resource
in Germany, as we’ve discussed earlier today. [The Chairman] So Germany is successful in
deploying solar at 40 to 45 percent. [Mr. Reedy] Of the world’s best, yes, sir.
That’s correct. [The Chairman] And would Arizona and New Mexico
be at 100 percent and Florida and Georgia be at 85,
83 percent? [Mr. Reedy] Something of that nature, so the
success comes from the distributive nature of the—- [The Chairman] In other words, they would
be in the upper quintile in Florida for wind potential. [Mr. Reedy] Absolutely. [The Chairman] I mean solar potential. [Mr. Reedy] It is the Sunshine State. I owe
that to Governor Crist. [The Chairman] In 1940, there were 16 Congressmen
from Massachusetts and 6 from Florida, 1940. We
now have 10 and they have 30. [Mr. Reedy] My grandfather was one of those
immigrants. [The Chairman] I think they left for the weather. [Mr. Reedy] Yes, sir. [The Chairman] The sun. It might not have
been the sun, but that’s what they all said when they were saying
goodbye, that they were just tired of the winters, the clouds,
the snow, the rain, and they were going down to the Sunshine
State. So it does seem to me that they would be in the
upper quintile of sun available and then the technology deployed
to capture it would, it would seem to me, have to be developed
that might be somewhat dissimilar from Arizona or from Germany.
But clearly that’s more of a question of will than technology. [Mr. Reedy] Absolutely. [The Chairman] You do agree with that? [Mr. Reedy] I agree with that and I think
that having the certainty is the real measure of success.
We know where we’re going. [The Chairman] Again, Mr. Hobson, do you dispute
that Florida is in the upper quintile of the country
in terms of availability of sunshine? [Mr. Hobson] No, Chairman, like I said earlier,
I’m going to try to draw the distinction between solar,
several things I’d like to say about solar. One is I like to
draw the distinction between the demand side use of solar versus
the supply side use of solar. I think solar has great promise,
even in the Southeast we see examples of it all the time
of individual applications of solar for end use. For instance,
we sponsored with Georgia Tech during the Olympics their
swimming natatorium is all solar panel. Southern Company helped.
Georgia Tech. We funded that. It’s still operating today. It’s
a great application. There are those kinds of applications. It just becomes a different value proposition
when you’re thinking about using something like solar
on a large scale for the production of electricity on the supply
side. It’s not– it’s still things like reliability. [The Chairman] I understand that. No, I understand
these reliability questions which–can I ask the
Southern Company as well then to provide for us your analysis
of the comparison between the Southern Company and Germany in
terms of their integration of solar into their grid and why
you couldn’t do that, what obstacles would be for you to match
Germany at a 40 percent solar level with–it seems to me a
higher level of predictability and guaranteed sourcing. [Mr. Hobson] One other point I would say about
solar that has to be made and that is that we operate
in a region where our customers are paying about 8 cents a kilowatt
hour for electricity. We view solar in the 50 cents
per kilowatt hour range and so aside from just the technical
challenges associated with solar, there are economic
challenges. [The Chairman] Can I go back to you again,
Mr. Reedy, in Florida, is it 50 cents a kilowatt hour? [Mr. Reedy] No, sir, Mr. Chairman. Even in
a one off small applications, it’s well below 30 cents a kilowatt
hour. In utility scale applications, there’s analysis
that supports something around 11 to 12 cents a kilowatt
hour, in large, very large utility applications. [The Chairman] Could you give Mr. Hobson an
example of where it’s under 30 cents a kilowatt hour already?
You might not be able to know where of in Florida? [Mr. Reedy] Throughout the markets in California
and New Jersey which is pretty far north again, a
fair amount of clouds. Those are the costs that are being
seen by installers and contractors and by the end user. So we
would take great issue with those figures and the technology
is vastly improving and by prediction and analysis of the Department
of Energy it’s going to be down around 15 cents in about
5 years. [The Chairman] Is Governor Crist pessimistic
about solar energy in Florida? Is he aware of how cloudy
it is down there? [Mr. Reedy] Governor Crist has a saying, he
says, “It can be done. It can be done.” He is very optimistic
about it. [The Chairman] I do think it gets cloudy down
there in Florida. You’re on the beach all day. It’s
unbelievably hot. You’ve got 35 skin protection on to protect
you against the sun, then around 4:30 every afternoon you
have a thunderstorm that cools off the state. It’s really–it
happens every day and then after an hour it gets nice again. So
that’s a misimpression those of us who pay a lot of
money to go to Florida to get warm during the day have, but
the clouds it seems just don’t last that long or at least
the ads kind of just have the clouds going by very, very briefly.
The rest of the day it’s quite beautiful. So I just think that we need to work a little
bit more here with the Southern Company in learning a little
bit more about Germany and Denmark and other states that
have already reached a lower point price, a price point for their
solar. Let’s do this. Let’s ask each of you to give
us the one minute that you want us to remember, as we’re
going forward about these issues. And we’ll go in reverse
order and we will begin with you, Mr. Foster. [Mr. Foster] Thank you, Mr. Chairman. I would
like to stress to the Committee as someone with a lifetime
of activity being concerned about working people and their jobs
that we’re losing the global economic competition in this country
because of our tolerance of energy inefficiency and our reliance
on dirty forms of energy. We’re seeing the alternative in countries
like Germany and Denmark, Japan. Germany uses half the amount
of energy per capita as we do. We have a way forward that
would do an enormous amount to restore manufacturing capacity
in those parts of our country that have been hard hit
over the last decade, losing some three million manufacturing
jobs. We can do it based on a strategy of embracing global
warming solutions which include, as I said, very specific targeted
mandates from federal government like a Renewable Energy
Standard by believing in the efficacy over the long term
of meeting the global warming challenge, by capping our global
warming emissions, and relying on the creativity and
innovation and hard work of the American people. Thank you. [The Chairman] And how many jobs again, how
many jobs do you think are at stake here? [Mr. Foster] We believe that we would be on
balance 1.4 million jobs better had we taken on seriously
the Kyoto Protocol targets ten years ago. [The Chairman] Thank you, sir. Mr. Reedy. [Mr. Reedy] Thank you, Mr. Chairman. I would
close with an emphasis that solar energy is extremely predictable,
extremely reliable and is becoming extremely economic.
And I look forward to the day that we would be not discussing
its cost as greater than conventional generation and that day
will not be so far off, I would add, but rather less than conventional
generation and it would serve the utility well as a peaking
unit which is a common practice today and is today economic
with peaking generation. So I would urge with the lead
in photovoltaics followed by solar thermal energy, we will
find this discussion delightfully moot in the near future. [The Chairman] Mr. Hobson. [Mr. Hobson] Mr. Chairman, what I’d say I
would like for us to look to the success that the State of Colorado
has had, and hopefully, we’ll continue to experience in
the future, and focus in on that that is a state who took
a look at its renewable possibilities and is exploiting
those to the greatest extent. Southern Company is not opposed to commitment
to renewable energy. All we would call for is to allow
the different regions and the individual states to look at the resources
that are available, make their own determinations for
how much they can do and what limitations they have, and not
try to put a one size fits all renewable strategy across the
country. The Federal government should have an opinion,
should tell the states we think this is something we need
to do and then turn to the states and let the states assess
their own situations and develop standards that make
sense for them, rather than have to worry about whether or
not they fit into a group, a nationwide group. [The Chairman] Thank you. Mr. Sloan. [Mr. Sloan] I want to start off by saying
thank you for the opportunity and I want to point out Texas
is a conservative state and I can assure you they do not like
mandates. Yet, they do listen to the public and the public made
it very clear that they support renewables and they believed
everyone should do some renewables and that people that want
to do more could do more. Texas policy leaders listened to that. They
responded and they passed proactive, well-conceived, and
highly effective rules. I think it’s encapsulated–I asked
the chairman of the State Affairs Committee, as conservative Republican
as you’ll find in Texas, David Swinford, and he put
it this way about a mandate. He said “sometimes, if it’s important
enough, you just got to give it a little bit of a shove.” [The Chairman] Ms. Floyd. [Ms. Floyd] Last night I listened former Fed
Chairman Alan Greenspan and he said one of his key messages
was this country is headed for economic decline or we need
to change technology. And the question is how quickly can we change
technology? Things have changed in this country with resource
depletion, energy security, global warming, and it makes
traditional energy technologies untenable. And we have the
opportunity to participate in one of the biggest economic
development efforts, one of the biggest growth industries of
this century and I think the passage of a national renewal
electricity standard will show our leadership and will help us
capture this growth opportunity. [The Chairman] Thank you. And we thank each
of you for your testimony today. You’re really helping this
whole debate that we’re having here in Washington and we’re
having across the country and across the world. Back at the
dawn of the industrial age in the United States, in my
congressional district, when it began, when the Cabots and
the Lowells built their first factory right on the Charles River
in Waltham in my district, there were 280 parts per million
of carbon dioxide up in the atmosphere. Now we’ve moved to 380
parts per million, putting another blanket over our atmosphere,
warming up our planet even more. If we allow it to go to 450, 550 parts per
million, adding a second blanket, a third blanket that will
continue to heat up this planet, then there are really catastrophic
consequences. I visited with the Speaker and the Select
Committee in Greenland over the Memorial Day break. Greenland
has a thousand mile long ice cap on it. It’s 300 miles wide
and it is ten Empire State Buildings high. So think of looking
at the top of the Empire State Building and then looking
up ten more times. That’s how high the block of ice on top of
Iceland is. And on top of it now, are forming these huge
lakes that are getting larger and larger, and as the summer
goes on, they eddy, they burrow down right to the bottom
of the ice cap and the water then flows to the bottom of the
ice cap, creating these mulans that then further liquify, further
lubricate the bottom of the ice cap moving it ever more
quickly towards the ocean. As the ocean rises, of course, Florida will
be one of the principal victims. So will Cape Cod, the coast
of Massachusetts. That’s why Massachusetts sued
in the case, Massachusetts versus EPA. They were contending
that they should have the right to protect themselves against
this rising tide of climate change that was affecting our 200
miles of beaches. And the Supreme Court ruled in April 5 to
4 that Massachusetts was right and that we needed
a national policy to deal with this issue, that Massachusetts alone
could not deal with it, that we needed a plan that we were
going to put together. And it called upon, the Supreme
Court did, EPA to make a ruling on CO2 and whether or not it’s
a pollutant, whether or not it is causing this
heightened climate change, this global warming. Now the EPA, unbelievably, still has not ruled
whether or not CO2 is causing global warming. Every other
environmental minister in the world talks to their countries in
those terms. Our environmental minister does not. No one knows
the name of our environmental minister that might be the
beginning of the problem, that no one even knows his or her
name. But that is and of itself indicative of the
fact that no one state can deal with the problem, that
we need a national plan and then with that national plan we can
talk to China, we can talk to India. We can talk to the rest
of the world. No one intends on this being onerous. I think it’s
just a matter of technology. I think it’s out there. We can
allow the states to be flexible in using the technologies and
the resources that they have in order to meet this renewable
objective, but I think that we cannot compromise on the objective
which has to be that we begin to first stop and then reverse
global warming. And this is one of the central ways to do
it, to generate the electricity which we need. And in a lot of ways that’s what we’re learning,
that 100 years ago, Thomas Alba Edison, finding ways
of deploying electricity across our country and then across
the world, what a gift, a gift that led to washing machines
and televisions and computers and iPhones that ultimately resulted,
however, in all of this additional fossil fuel-generated electricity. So like many things, there’s a Dickensian
quality to it. It’s the best of technology and the worst
of technology now at the same time. And the same thing is true
for the automobile. What Henry Ford did in learning how to mass
produce these vehicles, it was wonderful. It transformed
our country and the rest of the world, but 100 years later, we
can now see how much it pollutes. So moving to hybrid technologies, moving to
cellulosic fuel for our vehicles in the same way that we have
to move increasingly to renewables for our electricity
generation deals with the other side of these technologies
which is the consequence that it can have for the whole
planet, and as a result to everyone who lives on it. And that’s
all we’re really talking about now, a technological addition
to what was invented by these great people long ago to
the benefit of our entire civilization. And we thank you for your contribution to
this debate and we yield to the gentleman from California
who has just walked in, Mr. McNerney for his round of questions.
And I would ask the gentleman if he would then adjourn the
hearing at that point, at the conclusion of his questions. [Mr. McNerney] Thank you, Mr. Chairman. I
had to run between meetings so I’m sorry I’m a little late, but
I appreciate all of your inputs. It’s been interesting and
informative. I have to say that I’m glad to finally meet Ms. Floyd.
We’ve had several telephone conversations over the years,
as I was trying to raise venture money for wind turbine projects,
but let’s see, my first question is for you, Ms. Floyd.
How confident are you that the national renewable portfolio
standards would increase the manufacturing base in this country
for wind energy, for solar, for other forms of new
energy technology? [Ms. Floyd] I’m very confident. It sends a
very strong market signal. It’s one that investors will
respond to and I want to further your point that this is broader
than solar and wind. While you were out voting I made the
point several times that $2.4 billion of venture capital last
year didn’t just go into solar and wind, but really a broad range
of technologies that can make a difference here. And so I’m very confident this would send
a strong signal to the investment community and to manufacturers,
that we would see manufacturing coming back into this country
and business expansion happening here as a result. [Mr. McNerney] My light keeps going on and
off. That’s encouraging because we’ve seen so much flight
of certainly wind, solar, fuel cells, going overseas. And
whatever we can do to encourage that flight back to this country
I think would be beneficial. Are there any other Members that
have a comment on that question? Looks like you’re ready to
go there, Mr. Sloan. [Mr. Sloan] Yes, and I would also concur that
an RES will really make the manufacturing market take
off. Wind is really at the leading edge of the renewables that
are going to be used and I think particularly for domestic manufacturing
the parts are so large and expensive to move around
they make a lot of sense to build near the markets. Already in
the State of Texas just with the announcements that we’ve had
with making sure the transmission system is going to be there and
the announcements from investors that want to build, there has
been a big uptake in manufacturing plants want to come to Texas. One is the wind with TECO-Westinghouse. They
just built a plant in Texas. There are several others that
I am aware of that are in negotiation right now. That’s
just the Texas market. When you talk about the whole country
with a long-term stable policy, that’s what the manufacturers
want to see. As I noted, there is a market there and not just
a market today and gone tomorrow, but a long-term steady market
and they will show up here. [Mr. McNerney] Thank you. Mr. Foster, did
you have a comment? [Mr. Foster] Yes, Mr. Chairman. The proof,
I think, is in what’s actually taking place already as a
result of the passage of state Renewable Energy Standards and earlier,
when you were out of the room, I listed a half-dozen locations
where plants have located specifically as a result of the
passage of state Renewable Energy Standards, ranging from Pennsylvania
to Minnesota and Iowa. In addition, our studies have shown that there
are some 43,000 firms in the United States capable
of manufacturing the various component parts that go into the renewable
energy industry, all of whom would be impacted by
the passage of a national Renewable Energy Standard. I think
the reverse is important to note, though too, what happens
when you don’t pass one. I was in Kansas recently meeting with state
officials there, responsible for that state’s renewable
energy initiative, which is not being done as a mandate,
but simply on a voluntary basis. And they express great
frustration that the one thing they could not accomplish with a
voluntary goal was the attraction of manufacturing to their state,
that manufacturers are simply not interested in
making the investment where there isn’t some degree of
market expectation, that those products will be used. So passage of a national Renewable Energy
Standard in my view would be critical to bringing the manufacturers
from around the world who are already doing that
work to locate their plants in the United States. [Mr. McNerney] Thank you, Mr. Foster. Mr. Hobson, you’ve mentioned that solar is
a little too expensive to seem practical in the southern
states. There is some new technology that I would describe
it as broadband solar photovoltaic, where they concentrate power
on a small reactor that takes advantage of ultraviolet, infrared,
and visible light. Do you think that would increase the
viability in your opinion of solar in those areas? [Mr. Hobson] I can’t specifically answer the
question, Congressman, about that technology. But I
think if it is a technology that number one, drives the cost
of solar down to fit more into the cost that consumers are
paying in the Southeast, that would be very positive. And
if it is a technology that improves the reliability of
solar so that we can depend on solar a much larger percentage
of the time. I think clearly, those are the two factors that
would make a technology more viable and more easily adaptable
into the supply-side of the grid. [Mr. McNerney] I understand everything you’ve
said, but to describe solar as not reliable I think is
something that would be arguable. So you might want to look into
that and the reliability of solar equipment is very good
now from my understanding. [Mr. Hobson] Let me be sure I am clear. When
I said reliability in that sense, what I mean is
the amount of time that the solar, that the resources there to
provide the energy. I’m speaking about the reliability of the
solar equipment itself. [Mr. McNerney] Thanks for the clarification. Mr. Reedy, do you think the time of day credit
requirements would help significantly impact the solar,
the cost viability of solar production. I mean, in your testimony
you mention that solar energy is available when the load is
the highest, at peak load and there is no provision for time of
day credit. Would that be an advantage, is there some way to
include that in federal regulation? [Mr. Reedy] It certainly would. Yes, sir,
Mr. Chairman. Currently, the utilities, when they consider
generation, it’s all about time of day and that’s how
the numbers that I gave are derived is from the cost at that
time of day. Most states do have a time of day provision or
rate structures for the utilities to offer their customers and
it is very critical in any type of regulation or legislation that
the rate be non- discriminatory. If you would otherwise qualify
for time of day, that if you have photovoltaic generation that
you can also be on the time of day rate. And to give an example, in Northern California
today, the time of day rates are very high on the peak
period and the photovoltaics are cost effective against those
rates, and so you could follow a strategy of generating
during when it’s worth the most to the utility and using your
load when it cost you the least and it works very well. [Mr. McNerney] So that might be another avenue
to look at, Mr. Hobson, about the cost-effectiveness of
solar if you can get the local utilities to pay for actual
peak load cost. Well, it looks like I’ve run out of my time
and I want to thank you for your patience in my arriving
late and answering questions. I want to agree with Mr. Foster
that this global warming is an opportunity for this country.
It’s also a significant threat and a challenge. But if
we take advantage of the opportunity, we can create new industries.
We can revitalize our rural economies. We can end
our dependence on oil and a whole host of things that would
be advantageous to our country. So I encourage you to continue
your good work. Thank you very much. The meeting is adjourned. [Whereupon, at 12:27 p.m., the hearing was
concluded.]

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