Hill Heat

The hearing addresses the future of coal under an economy-wide cap on greenhouse gas emissions, including the technologies and policies that may help reduce coal’s carbon footprint.

• Chair Pallone
• Chair Waxman

Witnesses

• David Hawkins, Director, Climate Center, Natural Resources Defense Council
• David Crane, President and CEO, NRG Energy Inc.
• Ian Duncan, Ph.D., Associate Director for Earth and Environmental Systems, Bureau of Economic Geology, The University of Texas at Austin
• Frank Alix, CEO, Powerspan Corp.
• Harold P. Quinn, Jr., President and CEO, National Mining Association
• Lindene Patton, Climate Product Officer, Zurich Financial Services Group

From the Wonk Room.

The economic recovery plan agreed to by House and Senate negotiators will “pump billions of dollars into ‘smart grid’ projects,” renewable energy, energy efficiency, and public transit. The conference report reduced some of the more controversial elements that were included by the Senate:

COAL SUPPORT

Wonk Room: Senate ‘Improvements For Integration’ Loophole May Make $4.6 Billion ‘Clean Coal’ Fund A Dirty Giveaway (2/12/09):

The Senate version of the American Recovery and Reinvestment Act adds $2.2 billion to the House’s allocation of $2.4 billion for the development of “carbon capture and sequestration technologies” (CCS). Furthermore, the Senate language adds a dangerous loophole that changes a potentially green investment into subsidy for a dirty industry.

CONFERENCE REPORT: Fossil energy funding is now $3.4 billion, with no specific terms or limitations.

NUCLEAR WEAPONS

Wonk Room: Senate’s Billion-Dollar Nuclear Weapons Provision Should Be Cut From Recovery Plan (2/10/09):

Buried in the Senate version of the economic recovery plan — despite the “heroic” efforts of Sen. Ben Nelson (D-NE), Sen. Susan Collins (R-ME), and other centrists to “fr[y] the bacon” — is an allocation of $1 billion to the National Nuclear Security Administration (NNSA) for “weapons activities.” This provision, divorced as it is from any semblance of national security strategy, should be eliminated.

CONFERENCE REPORT: Nuclear weapons funding has been eliminated.

‘CLEAN ENERGY’ LOAN GUARANTEES

Wonk Room: Senate Appropriators Add $50 Billion Nuclear Waste To Recovery Plan (1/30/09):

On Wednesday, the Senate Appropriations Committee voted to increase nuclear loan guarantees by $50 billion in the economic recovery package (S. 336). This sum “would more than double the current loan guarantee cap of $38 billion” for “clean energy” technology.

CONFERENCE REPORT: These loan guarantees have been eliminated.

From the Wonk Room.

The coal-industry public relations group, American Coalition for Clean Coal Electricity (ACCCE), is celebrating the Senate’s insertion of billions of dollars of coal R&D funds in the recovery plan in an email to supporters. The Senate plan added $2.2 billion to the House’s allocation of $2.4 billion for the development of “carbon capture and sequestration technologies.” ACCCE heralded the ”$4.6 billion in clean coal technology funding” in the message, claiming the “funding is important because”:

• It contributes to energy independence, allowing us to use coal that is right here in America
• It stimulates the economy and could create almost 7 million job-years of employment and over $1 trillion in sales
• It will help fight climate change and aid other environmental goals by promoting technologies to reduce carbon dioxide and major air pollutants

It is not the case that $4.6 billion for coal technology could “create almost 7 million job-years of employment and over $1 trillion in sales.” The “7 million job-years” figure comes from “Employment and Other Economic Benefits from Advanced Coal Electric Generation with Carbon Capture and Storage,” a BBC Research report commissioned by ACCCE. The report says that the construction of 100 gigawatts of advanced coal plants - about 200 plants over a fifteen-year span - would generate that much job activity. The construction expenditures for a single plant with CCS is estimated at “approximately $2.0 to $2.1 billion.” So the $4.6 billion in the Senate plan is enough for the construction of only two plants and about 6,000 construction and manufacturing jobs. Two hundred plants would cost a $393 billion. The ACCCE email “is a bit confused,” Doug Jeavons, the author of the BBC report tells the Wonk Room:

The nearly 7 million job-years estimate is associated with full scale development of about 100 gigawatts of advanced coal CCS capacity, not just the proposed $4.6 billion in the stimulus plan.

Furthermore, the technology to build such plants does not yet exist. As NV Energy announced when they indefinitely postponed the construction of a coal-fired plant in Ely, Nevada:

The company will not move forward with construction of the coal plant until the technologies that will capture and store greenhouse gasses are commercially feasible, which is not likely before the end of the next decade.

To make CCS technology commercially viable, the Center for American Progress recommends, there should be a federal greenhouse emissions performance standard put in place for new plants, and a cap-and-trade system to make polluters pay for their emissions.

On Thursday, February 12, 2009, the Subcommittee on Technology and Innovation will convene a hearing to review the research, development, and deployment activities of the Department of Transportation. The hearing will focus on issues related to the funding, planning, and execution of current research initiatives and how these efforts fulfill the strategic goals of both Federal and State Departments of Transportation, metropolitan transportation organizations, and industry. With the expiration of SAFETEA-LU in FY2009, this hearing will also examine possible ways to improve the current Federal transportation effort.

Witnesses

• Paul Brubaker, former Administrator of the Research and Innovative Technology Administration, U.S. Department of Transportation.
• Dr. Elizabeth Deakin, Director of the University of California Transportation Center, University of California, Berkeley
• Robert E. Skinner, Jr., Executive Director of the Transportation Research Board.
• David Wise, Acting Director of Physical Infrastructure Issues, Government Accountability Office
• Amadeo Saenz, Jr., Executive Director, Texas Department of Transportation

Overview

Signed in 2005, the Safe, Accountable, Flexible, Efficient, Transportation Equity Act: A Legacy for Users (SAFETEA-LU) (P.L. 109-59) authorized a total of $2.227 billion through FY2009 for research and related programs under Title V of the bill. This Title authorizes surface transportation research by the Federal Highway Administration (FHWA), training and education programs, the Bureau of Transportation Statistics, the University Transportation Centers (UTCs), and Intelligent Transportation Systems (ITS) Research. The Science and Technology Committee’s jurisdiction over surface transportation research and development is based on House rules which grant the Committee jurisdiction over, “Scientific research, development, and demonstration, and projects therefore” and legislative precedent. Jurisdiction over these programs is shared with the Transportation and Infrastructure Committee. The Science and Technology Committee has a long referral history regarding surface transportation research and development (R&D) bills, including H.R. 860 in the 105th Congress and H.R. 242, and H.R. 243 in the 109th Congress. Elements of each of these bills were incorporated in the highway reauthorization bills for the respective Congresses.

Issues and Concerns

Planning, Coordination, and Evaluation of Research, Development, and Technology (RD&T)

Despite the creation of a specific RD&T coordinating agency within Department of Transportation (DOT) by the Mineta Act of 2004 (P.L. 108-426), and requirements in the Transportation Equity Act for the 21st Century (TEA-21) (P.L. 105-178) and SAFETEA-LU that DOT evaluate and coordinate its research programs, efforts in this regard continue to fall short. In 2003, the Government Accountability Office (GAO) evaluated the coordination and review efforts by the Research and Special Programs Administration (RSPA)1. RSPA had been created by the Secretary of Transportation to coordinate and review RD&T activity across the modal agencies. It was dissolved when the Mineta Act created the Research and Innovative Technology Administration (RITA) to fulfill largely the same functions. In the 2003 report, GAO found that efforts to locate duplicative programs and opportunities for cross-collaboration between the modal agencies were hampered by a lack of information on the RD&T activities being pursued across the modal agencies. GAO also found that DOT did not have a systematic method for measuring the results of federal transportation research activities, or a method to show how their research impacted the performance of surface transportation in the U.S. RSPA cited a lack of resources to perform these types of evaluations, and they also stated that each modal agency undertook its own evaluation of its research programs. GAO recommended that RSPA define metrics to evaluate the outcomes of its DOT-wide RD&T coordination efforts. In 2006, GAO did a follow-up evaluation of RD&T coordination and evaluation. They again offered similar recommendations, noting the continuing lack of common performance measures for DOT RD&T activities. However, at the time of that evaluation, RITA had just recently been established. GAO commended the initiative in RITA’s FY2007 budget request to devote $2.5 million to RD&T coordinating activities (an increase of nearly $2 million over the $536,000 spent by RSPA in FY06 on coordination).

In November of 2006, RITA submitted the Transportation Research, Development and Technology Strategic Plan for 2006-2010 to Congress. The Transportation Research Board (TRB), of the National Research Council, evaluated this plan and noted, “The strategic RD&T plan for 2006-2010 is a reasonable first effort. It offers useful descriptions of the many RD&T programs within the Department. At the same time, it is more a compendium of individual RD&T activities than a strategic plan that articulates department wide priorities and justifications for RD&T programs and budgets.” According to TRB, the plan lacked stakeholder input and also failed to identify how stakeholder input would be sought for strategic planning in research topic areas. It further failed to articulate the role and value of DOT’s RD&T activities; describe the process used for selecting research topics to ensure their relevance, quality, or performance; describe the expected outcomes from RD&T; and describe the process for monitoring performance. In TRB’s view, the plan, at a minimum should have explained the extent to which quantifiable goals, timetables, and performance measures would be part of RD&T programs.

The major surface transportation RD&T program of the FHWA has received similar criticisms regarding coordination and evaluation as DOT’s overall RD&T program. The program is highly decentralized, with research activities taking place in five out of the thirteen offices within the agency. In 2002, GAO reviewed FHWA’s R&D approach and urged that the agency “develop a systematic process for evaluating significant ongoing and completed research that incorporates peer-review or other best practices in use at Federal agencies that conduct research.” FHWA subsequently developed its Corporate Master Plan for Research and Deployment of Technology and Innovation, released in 2003. This document contains many overarching principles, such as measuring the performance of RD&T activities, but does not provide specific mechanisms through which FHWA will implement all of them. It is also unclear from FHWA’s RD&T Performance Plan for 2006/2007 if the many research projects listed have been evaluated for their use by the transportation community. Without such analysis, the information portrayed in these documents establishes outputs, but does not offer any outcomes.

Tech-Transfer

There is general agreement that the transfer of technology and new ideas from the R&D stage to deployment and adoption is slow. In testimony before this Committee in September of 2007, FHWA identified some of the contributing factors that slow the state and local adoption of new transportation technology, including insufficient information on the benefits versus the costs of new technologies; lack of confidence in new technologies or a lack of performance data; and a lack of incentive mechanisms to encourage the deployment of new technology. TRB Special Report 295, The Federal Investment in Highway Research, 2006-2009: Strengths and Weaknesses, notes the important role FHWA plays in educating state DOTs about new technologies and encouraging their adoption, noting such efforts as FHWA’s activities to identify, market, and track the deployment of market-ready technologies and incorporate a strategic plan for the deployment of pavement research activities. However, the funding for technology transfer activities at FHWA has suffered in recent years, falling from $100 million to $40 million after the passage of TEA-21. The report further notes, “The missing element among all of FHWA’s deployment activities appears to be the resources within the agency with explicit expertise in technology transfer and deployment that could provide guidance to the various efforts agency wide [sic].”

The Intelligent Transportation Systems program is a well studied example of transfer and deployment of R&D efforts. In 2005, GAO identified broad issues with DOT’s deployment goals for traffic management ITS, finding that the goals did not take into account the level of ITS needed to accomplish local objectives and priorities; did not reflect whether localities were operating the ITS as intended; and did not adequately capture the cost-effectiveness of ITS 7. Additional studies of ITS deployment have found that local officials are aware of ITS technologies but feel that the benefits are not adequately described.

Recommendations from TRB

With support from FHWA, TRB’s Research and Technology Coordinating Committee (RTCC) has periodically assessed the state of highway research and made recommendations to policy makers. In its recent report, TRB Special Report 295, The Federal Investment in Highway Research, 2006-2009: Strengths and Weaknesses, the RTCC evaluated the investments in highway R&D made under SAFETEA-LU. According to the report, transportation R&D is significantly under funded when compared with the R&D investments made in other industrial sectors. Also, the report recommended that the matching requirement for UTCs be adjusted from 50-percent to 20-percent. According to the RTCC, if UTCs relied less on state DOTs and others for matching funds, they would be free to pursue longer-term advanced research topics and move away from applied research that could be handled elsewhere. The RTCC recommended that FHWA’s Exploratory Advanced Research Program continue as well, and that a larger percentage of the agency’s research budget go toward advanced research. Additionally, the report states that all research grants, including those to UTCs, should be made on a competitive, merit-reviewed basis. The RTCC recommended that FHWA be given more resources to engage stakeholders and carry out technology transfer activities. FHWA should be given the resources to take the lead in establishing an ongoing process whereby the highway community can set these priorities. Finally, the RTCC noted that the Strategic Highway Research Program 2 (SHRP 2) was funded significantly less than stakeholders had requested, and recommended that it continue to receive funding for another two years. TRB states many recommendations but does not provide specific mechanisms to accomplish them.

Greenpeace will release the results of a carbon footprint analysis of the economic recovery package via teleconference this Thursday at 10:30 am ET (details below). The analysis was conducted by ICF International, a leading climate and energy consulting firm for governments, Fortune 500 companies, and non-profits (http://www.icfi.com/).

• ICF International: William Grayson and Dr. Joel Bluestein

• Greenpeace: Kert Davies, Research Director and Steven Biel, Global Warming Campaign Director

According to several recent studies, global warming will create a major drag on the U.S. and world economies – $271 billion in the United States alone by 2025 according to NRDC, and 5 – 20 percent of global GDP by 2100, according to the U.K. government’s Stern Review. An effective economic stimulus must also reduce global warming through spending on energy efficiency, conservation, clean energy, and clean transportation options.

Teleconference participants will discuss how the different provisions of the stimulus package will affect the climate in the short and long run and will discuss the climate and related economic impact of different stimulus proposals and amendments under consideration.

Dial-in number: 1-319-279-1000
Toll free dial-in number: 1-866-399-5852
Participant pin: 1001217#

RSVP to [email protected]; confirmed teleconference attendees will get an advanced look at the report.

From the Wonk Room.

The Obama economic recovery plan makes a major investment in the modernization of our electricity infrastructure, in order to transform an often-overwhelmed patchwork of balkanized regional networks into a national “smart grid” based on Internet-like technology. Repower America, Al Gore’s campaign to have America use 100% renewable electricity in ten years, argues that a national smart grid “will save money, increase reliability and protect consumers from outages, and make possible a clean electricity system.”

Building a smart grid requires both new technology and regulatory policy. In addition to a $20 billion investment in smart grid deployment, the recovery plan offers $2 billion in grants to promote a subtle but key shift in electric utility regulatory policy:

Policies that ensure that a utility’s recovery of prudent fixed costs of service is timely and independent of its retail sales, without in the process shifting prudent costs from variable to fixed charges.

Traditional electricity utility pricing discourages utilities from promoting conservation and efficiency—instead, the more wasteful their consumers are, the better. So demand goes up, utilities build new power plants, and still costs rise. Utility shareholders’ interests are pitted against the rest of society.

Therefore, several states have implemented policies that decouple profitability (“recovery of prudent fixed costs of service”) from demand (“retail sales”), by using public funds and rate adjustments to guarantee an expected annual profit for the utility company and to subsidize investment in energy efficiency.

Obama’s economic recovery package contains $2 billion in state-level block grants that will be released “only if the governor of the recipient State notifies the Secretary of Energy that the governor will seek, to the extent of his or her authority, to ensure” that decoupling and energy efficiency incentive programs will occur.

Because our electrical infrastructure is a vital public resource, the profits of utility executives and shareholders must not be put above the public good. As Public Citizen warns, decoupling for unregulated utilities can lead to “windfall profits for the industry.” The California electricity debacle exposed the great failure of the experiment of utility deregulation, and the recovery package does not go far enough to bring utilities back under control.

President Obama, Secretary of Energy Steven Chu, and legislators like Sen. Jeff Bingaman (D-NM) have stated that our entire nation needs to move to a low-carbon economy as rapidly as possible, highlighting transformation of the electricity grid as a key component.

Full decoupling language in the House-passed economic recovery package (HR 1):

From the Wonk Room.

On Wednesday, the Senate Appropriations Committee voted to increase “clean energy” loan guarantees by $50 billion in the economic recovery package (S. 336). This sum “would more than double the current loan guarantee cap of $38 billion” for “clean energy” technology:

TITLE 17—INNOVATIVE TECHNOLOGY LOAN GUARANTEE PROGRAM

The Committee also recommends an additional $50,000,000,000 to support the deployment of eligible technologies under the Section 1702(b)(2) of EPACT 2005 that will contribute to transforming the energy sector. This funding will add to the existing loan guarantee authority provided in other appropriations bills to support self-financed loan guarantees. The Committee is aware of the strong interest in the program and the large number of pending applications.

In contrast, the committee allocated only $9.5 billion exclusively for “standard renewable energy projects.” Although the loan guarantee program covers nuclear technology, carbon capture and sequestration for coal plants, coal-to-liquids projects, and renewable energy, the vast bulk of requested loans – $122 billion – are for new nuclear power plants. This $50 billion nuclear line item nearly matches the total allocation for genuinely clean energy in the House version of the stimulus package: only $52 billion in total for smart grid, renewable energy, and energy efficiency investments.

Unlike renewable energy and energy efficiency technology, investments in the nuclear industry generate few jobs or economic growth. The nuclear industry has developed through massive federal subsidization from research to deployment over decades. Such a massive expenditure of nuclear pork has no place in the economic recovery bill, according Brent Blackwelder of Friends of the Earth, who discovered the expenditure. Blackwelder called the appropriations “unconscionable”:

Now is not the time for another bailout boondoggle. Nuclear power is the most expensive form of energy there is. It takes 10 years or more to build a reactor, so it is impossible to claim with a straight face that this preemptive bailout has anything to do with creating jobs. Senate appropriators’ decision to include such wasteful spending in the stimulus is an example of Washington at its worst.

From the Wonk Room.

Today, in the first hearing of the House Energy and Commerce Committee under the leadership of Rep. Henry Waxman (D-CA), a coalition of corporations and environmental organizations renewed their call for an industry-friendly cap and trade system. The U.S. Climate Action Partnership made a tremendous splash two years ago by coming out in favor of a cap-and-trade system to limit greenhouse gases. Though their recommendations overly benefited polluting industries, USCAP’s call for mandatory action changed the political tide in Washington. They deserve credit for moving past conservative rhetoric that denies the need to act, and for stating that “action by the U.S. should not be contingent on simultaneous action by other countries,” a common excuse for delay.

But climate change science and politics have moved on in the past two years, and USCAP has lost its mantle of leadership. Their proposal fails to satisfy the scientific, economic, and societal principles that must underlie any “framework for legislation to address climate change”:

EMISSIONS TARGETS. USCAP’s recommended emissions limits are insufficient to prevent catastrophic climate change. They call for U.S. emissions to be reduced by at most 7 percent below 1990 levels by 2020. However, as Center for American Progress fellow Joseph Romm indicated in a recent report, “A U.S. climate bill should set a target of reducing U.S. greenhouse gas emissions 20 to 30 percent below 1990 levels by 2020.” Furthermore, USCAP calls for “generous limits on the use of offsets” of two to three billion tons of CO2 a year, which means actual emissions wouldn’t have to begin reducing until 2030.

MONEY. USCAP calls for provisions to prevent emissions permits from exceeding a “threshold price” and for “a significant portion of free allowances should be initially distributed to capped entities and economic sectors.” In other words, polluters should be protected from paying the cost of compliance with the already fatally weakened cap. This will lead to windfall profits for polluters at the expense of consumers. President-elect Barack Obama and other progressive leaders have joined the Center for American Progress in calling for full auction of emissions permits to fund public investments and protect low-income consumers from economic hardship.

USCAP members include major global warming polluters in multiple industries—chemical (Dow, DuPont, Johnson & Johnson), oil and gas (Rio Tinto, Shell, BP America), manufacturing (Alcoa, Caterpillar, Siemens, GE, Boston Scientific), automotive (Ford Motor, GM, Chrysler, Deere), and utilities (Duke, PG&E, Exelon, FPL, PNM), as well as the financial services industry that would administer a cap-and-trade system (AIG, Marsh, Xerox).

The environmental organizations in the partnership are the Natural Resources Defense Council, the Environmental Defense Fund, the World Resources Institute, the Pew Center for Climate Change, and the Nature Conservancy. However, the National Wildlife Federation has left the partnership, saying that it instead will work to “enact a cap-and-invest bill that measures up to what scientists say is needed and makes bold investments in a clean energy economy.”

Responses below:

From the Wonk Room.

Jurisdiction over energy and environmental issues – including global warming legislation – in a key House committee will be moving from two Democrats sympathetic to industrial polluters to a progressive environmentalist. According to the Boston Globe, Rep. Edward Markey (D-MA) will become chair of the Energy and Environment Subcommittee of Rep. Henry Waxman’s (D-CA) House Committee on Energy and Commerce. Markey’s new subcommittee will replace the Energy and Air Quality Subcommittee chaired by Rep. Rick Boucher (D-VA), a coal-country representative, and the Environment and Hazardous Materials Subcommittee chaired by Rep. Gene Green (D-TX), an oil-patch Democrat.

Rep. Henry Waxman (D-CA), like Markey a strong proponent of progressive action to combat climate change, is in the process of reorganizing the energy and commerce committee after wresting control from Rep. John Dingell (D-MI):

As chair of the energy and environment subcommittee, Markey will have jurisdiction over greenhouse gas emissions legislation, such as the iCAP bill he proposed last year. He will also oversee the Clean Air Act, fossil energy, nuclear energy, drinking water and Superfund cleanups. Markey will remain chair of the House Select Committee on Energy Independence and Global Warming, which has no power over legislation.

Boucher will take Markey’s former seat as chair of the subcommittee in charge of telecommunications and the Internet. Boucher, like Markey, is a champion of network neutrality and patent reform.

Resources for the Future 1616 P St. NW 7th Floor Conference Room Washington, DC 20036

Presented By: John Linn University of Illinois, Chicago

If you have any questions, please contact Joe Aldy at [email protected] and 202-328-5091.