he will be with us at 8:15 eastern time. then the chief deputy whip to weigh in on the payroll tax cut. that's tomorrow morning at 7:00 eastern time. thanks for joining us on this thursday. i hope you enjoy the rest of your evening. now a senate budget hearing with energy secretary steven choo. then the president's 2013 budget request. then remarks on u.s./china relations by the chinese vice president. this is c-span 3 with politics and public affairs programming throughout the week and every weekend, 48 hours of people and events telling the american story on american history tv. get our schedules and see past

programs on our web sites. you can join in the conversation on social media sites. now energy secretary steven choo testified before the natural resources committee about the president's 2013 budget request. the $3.8 trillion package includes $27.2 billion for the energy department, which is a 3% increase from 2012. this is almost three hours. okay. why don't we get started. thank you for coming. today we have planned to review the budget 2013. we welcome secretary chu to testify and present the administration's budget to us today.

the priorities laid out in the president's proposed budget reflect a strong commitment to clean energy and the increased security and economic benefits that made in america energy can achieve for us through american innovation and as well as manufacturing. in an overall budget request that seeks to provide substantial government-wide deficit reduction i'm pleased to see that we have a proposed 3.2% increase in the department of energy budget. this is an investment in the nation's energy future that will boost our economic growth and global competitiveness and protect the environment and allow the u.s. to continue important nuclear nonproliferation work.

informed by the technology review which we had a hearing on a couple of months ago the department of energy's budget request cuts funding in mature technology areas and provides increased resources for the most promising clean energy innovations. this is an important step towards a national energy policy that invests in critical energy priorities within a framework of a sustainable fiscal policy. the department of energy's budget for the committee today supports a range of cutting-edge technologies that will enable us to lead in the global race for clean energy. increased investment in high performance computing and basic science will increase understanding and spur new energy technology development, continued investments and support high risk informational projects helping them to mature and attract nongovernmental funding. support for solar and wind and geothermal and biomass energy will develop our portfolio of available energy sources and

enable a transition to cleaner technologies and meanwhile funding for research on carbon capture and sequestration and methane gas hydrates and minimization will allow us to use fossil resources in a responsible way. this budget provides funding to address critical grid monitoring issues through a new electricity systems innovation hub and significant funding increases for advanced energy-efficient manufacturing. this holds a promise of providing jobs for the future. it's important to recognize that the research and development programs that i've mentioned here cannot fully meet the challenges of bringing new energy technologies to the commercial marketplace. the capital requirements to move promising technologies from the

lab bench to pilot scale and finally to commercial scale are enormous. our overseas competitors have figured this out. they are moving aggressively to gain an edge in clean energy technology, much of our effort to support domestic players in this race has occurred through the loan guarantee program, that's a proposal that senator domencici and i made as part of the act. at its core the loan guarantee program is intended to allow the government in the case of new technology development and deployment to take on risks that the private investor cannot. mr. herb allison has just published a useful report with some recommendations for managing the program going forward. and many of us.

are -- many of these are similar to approaches that senator mikulski and i have incorporated to the clean energy deployment legislation, the seta legislation that we reported from the committee. we'll be having a hearing on this report by mr. allison when we return after this next week's recess. i will have some questions for the secretary about his, about the allison report and the state of the loan guarantee program when we get to questions. again, thank you, mr. secretary, for coming. we look forward to your testimony. let me also just mention before calling on senator mikulski, i appreciate the technical assistance that your staff and the folks at the energy information administration and other parts of d.o.e. provide in helping provide the standards for clean energy standards. i hope we can introduce this legislation in a couple of weeks, the modeling and analysis that's been done by your

department has been very helpful in helping us develop that bill. so let me call on senator mikulski for her opening statements. >> thank you, mr. chairman. thank you for being here. to speak to the budget as it relates to the department of energy. i was disappointed with the administration's overall request for fiscal year 2013. i think we all hoped and i certainly expected that the president would lead the way by presenting a good plan to reduce our debt, grow our economy. i think it was an opportunity to address the entitlement issue, reform the tax code, make swift progress in balancing the federal budget or at least moving in that right direction. but instead we have a document that i believe largely ignores the greatest threat to our economy and that's the more than $15 trillion debt that let u.s. first-ever credit downgrade last

summer. this year it proposes more loopholes. it describes an economy built to last and yet is filled with proposals that have virtually no chance of passage. and unfortunately i look at the energy budget and i think this is clear within the energy policy as well. i can understand and certainly support many of the proposals that are within the d.o.e. budget. i greatly appreciate the emphasis on science and research. i think that's key. more money for geothermal research i believe is a good thing and emphasis on dropped in biofuels clearly a worthy endeavor. but i have some heartburn with the decision to reduce the funding for renewable waterpower. this is an issue that i hope we can discuss in the questions and answers after this. r and d efforts that could help

unlock massive volumes of unconventional resources are again zeroed out. i'm concerned by many of the big ticket expenses that are either directly or indirectly tied to this budget. we've got new and renewed tax credits as a extension of the 1603 program. billion dollar vehicle deployment program. $5 billion for advanced programs. $6 billion for energy home star programs. and i clearly understand why people would want to fund all of those and i certainly have shown my support in many of these areas but given the state of the federal budget, where we are, i would stress that now is a time to differentiate between those things that we might want to fund and those things that we need to fund. and while d.o.e.'s discretionary budget just grows by over 3% in this request adding all the programs and subsidies in the broader budget will nearly double our spending on energy and that concerns me.

i'm willing to support more spending in this area but only if the revenues are derived from new and not existing production. but that's another problem with the budget. it reignites a fight that the administration that's waged and overwhelmingly lost i might say for the past three years. instead of taking steps to direct new domestic energy from our tremendous resource base the administration has decided again to try to extract $40 billion from the consumers of oil and gas and coal regardless of the consequences that they could have for our energy supply, our economy and our security. the president in his state of the union called for an all of the above approach to energy policy. i think that certainly is something that i have embraced and most of our colleagues here. but i'm just not seeing that play out within the budget and it causes me to wonder whether the budget planners were working

together with the president and he enunciated those words in his speech. i would like to see us get to that point. again, i appreciate you secretary chu. i think you do try to make a very concerted effort in a difficult area during difficult times. thank you for being here. look forward to your responses to some of these very critical issues. thank you, mr. chairman. >> secretary chu, why don't you take as much time as you would like to describe the budget and any other points you want to make. >> thank you, chairman bingham and thank you ranking member murkowski and members of the committee. thank you for the opportunity to discuss the fy-'13, president's fy-'13 budget request for energy. i want to begin by thanking senator bingham for his years of leadership. it's a privilege to work with you and i look forward to continue to work with you this

year. to promote economic growth and strengthen national security president obama has called for an all of the above strategy that develops every source of american energy. the president wants to fuel our economy with domestic resources, while increasing our ability to compete in the clean energy race. although the united states has reclaimed the title of world leader in clean energy investments, we're at risk of falling behind again unless we support our domestic clean energy economy. our country face as stark choice. we can create jobs making and exporting the energy technologies of tomorrow or we can see the leadership to other countries that are investing in these industries. as president obama said, passing a clean energy standard is a vital step that congress can take to broaden our clean energy market. making the most of the america's energy resources is a pillar of the president's economic blueprint to build an economy that lasts. the department fy-'13 budget

requests $27.13 billion is guide by the president's vision, our 2011 strategic plan and our technology review. it supports leadership in clean energy technologies, since and innovation and nuclear security and environmental cleanup. trillions of dollars will be invested in clean energy in the coming decades. to seize this opportunity, the budget request invests in the research, development, manufacturing and deployment of energy technologies. decades ago the energy democratic support helped develop the technologies that loud us to tap into america's shale gas resources. today our investment can unlock promise of renewable energy and energy efficiency. the budget requests invests approximately $4 billion in our energy programs. it advances progress in areas from solar to offshore wind to carbon capture utilization.

it helps reduce our dependence on imported oil by creating next generation biofuels and fuel-efficient vehicle technologies. the budget request invests $770 million in nuclear energy program to help develop the next generation of power technologies including small modular reactors. includes funding for the continued nuclear waste r and d which aligns with the recommendation of the blue ribbon commission on america's nuclear future. as we move to a sustainable energy future america's fossil fuel energy resource will continue to play an important role in our energy mix. the budget requests include $1 $12 million grant, part of the $45 million private research and development initiative by the departments of energy, interior

and epa. to understand and minimize the potential environmental health and safety impacts of natural gas development through hydraulic fraction. the budget promotes energy efficiency to help americans save money by saving negotiate and its sponsors on industrial materials and process to help american manufacturers cut costs and compete. to maximize our energy technology efforts, the department is coordinating research and development across our basic and applied research programs as well as rpe in areas including batter injuries biofuels and electric grid technologies. to encourage manufacturing in the deployment of clean energy technologies the president has called for extending proven tax incentives including the tax credit and advanced energy manufacturing tax credit. as industry congress and the american people make critical energy decisions, it's also important that we adequately fund the energy information administration. competing in the new energy economy will require our country to use all of our resource including american ingenuity.

to help the united states at the forefront of science and energy to fund these progresses in the material science, basic energy science, advanced computer and more. the budget request continues to support energy frontier research centers which aim to solve specific scientific problems to unlock new clean energy development. so far these research centers have published more than 1,000 peer review papers and filed more than 90 patent invention disclosures. it also supports the five existing energy innovation hubs and proposes a new hub in electricity systems. through the hubs we're bringing together our nation's top scientists and engineers to achieve game changing energy goals. additionally the budget requests

include $350 million for rpe to support research projects that could fundamentally transform the way we use and produce energy. rpe invests in high risk high reward research projects that if successful could create the foundation for entirely new industries. in addition to strengthening our economy, the budget request strengthens our security by providing 11.5 billion within the national nuclear security administration. the engineering capabilities within the nuclear securities enterprise will become more important in sustaining the u.s. newark deterrent. that's why the budget requests asks for $6.7 billion for weapons activity and $1.1 billion for the naval program.

additionally it supports nsa's work to prevent terrorism. includes 2.5 billion to implement key nuclear security, nonproliferation and energy control activities. finally the budget request includes 5.7 billion to continue progress to clean up the cold war nuclear sites. the budget request makes strategic investments to promote prosperity and security. at the same time we recognize the country's fiscal challenges and are cutting back where we can. we're committed to performing our work efficiently and effectively. in countries in europe, asia and throughout the western hemisphere recognize the energy opportunity and are moving aggressively to lead. this is a race we can win. but we must act with fierce urgency. thank you and i'll be pleased to answer your questions. >> thank you very much, mr. secretary.

let me start with five minutes of questions. i'm sure all members will have questions. i gather from the news that you heard yesterday when visiting the two new nuclear power plants have have been licensed in georgia. my understanding is the loan guarantee program was to some extent involved in the development of those two plants. i guess i would be interested in getting your perspective. i know we've had lots of hearings in congress on solyndra and the lost taxpayer dollars there. looking at the loan guarantee program overall, is it important for the country to maintain a loan guarantee program to assist with development and deployment of new technologies in the

energy area? if so, how do you propose in this budget, how does the administration propose that we move forward with that? >> first, senator, let me say that if you look at the loan guarantee program, the 1703, the 1705, atvm parts of the loan program overall it helped unleash about $40 billion of investment in these industries in projects like the two new nuclear reactors being built in vogle. it helped ford do a major retooling to build cars that, displayed at the detroit auto show several months ago, really revolutionary, wonderful cars that could be sold worldwide. there are many, many aspects of

this loan program which have really helped bring back a lot of what we were famous for for a century. it helped stimulate the deployment of many renewable energies. the list goes on. now, that loan program, the 1703 loan program is continuing. the atvm program is continuing. we still think those are worthy projects. going forward, we do see a need as part of an overall plan to finance projects. projects, for example, where you have a solid technology like on shore wind technology is very solid, a known technology, a way of financing it so we can deploy these with power purchase agreements low risk. there are other -- so that's one part. there are other parts i think that really could help drive it forward. bloomberg new energy finance

just completed a study about a month ago summarizing what happened in 2011 and projections for 2012. they said, if -- and they looked at all forms of energy, new, gas turbines, coal, wind, solar all the way down the line. they said if you have 10% finance, borrowing charges for all these forms of energy, wind today -- and this is wind on a site that's a four site, not a six site. it's a moderate site, within 10% or 15% of the cost of the loss form of energy today which is new gas, and we expect that to improve still further. we also expect solar to be coming down. so this is all good news, but you need a financing mechanism. even at 6%, 8%, 10%, that would really tip the balance. >> do you know -- let me ask on a somewhat different issue. we had a very good hearing where

the quadrennial technology review was presented to us, and this was the first of these quadrennial technology reviews. to what extent were the conclusions in that quadrennial technology review used to influence what you've presented to us in this budget? does this budget reflect the same priorities that the quadrennial technology review identified? >> to a large extent, yes. i think the quadrennial technology review, the first one in the history of the department of energy, we wanted to step back and say a slightly different question than what are the things we should be funding, but what are the things we should be finding where the taxpayer dollars will do the most good? if we find there are certain areas that the private sector is well invested in, we have to say

we really shouldn't funding that. they're taking the ball and running with it. this is good. we did this with research in shale gas, 1978, '92, the industry didn't want to touch it. they didn't think it was feasible. horizontal drilling or fracking the rock. industry picked it up. that's the attitude we in doing this, that where could we put our dollars that would actually stimulate the research and development to a point where the private sector starts to run with it and grow american industries. so that quadrennial technology review was very useful in helping us find out by pulling back and looking across all of our funding arms energy, offices and now rp, are we putting the dollars where we think they can do the most good. that is beginning to shape. we hope as it goes on further, just like the quadrennial

reviews of the pentagon and state, actually set up long-term plans that can help our country. energy investments are 60, 70-year investments. they can't be decided year to year to year. you can't -- when you build a new gas plant, a transmission line, you name it. these are long-term investments. >> thank you very much, senator murkowski? >> thank you, mr. chairman. the chairman asked you questions about the loan guarantee program. i appreciate the fact that we will be having a hearing when we return from the recess. i am one who believes there is a useful role to be played in the financing and the deployment of our advanced energy technologies and the loan guarantee program can be helpful. we need to make sure we get it right. the question i would ask you this morning, we can certainly work around your schedules. but will you make yourself available to come testify at the

hearing when we are -- when we're able to schedule one? >> there's several hearings. there's going to be one in the house, one in the senate. if this committee wishes me to appear, i will appear. >> i would think it would be helpful and i would certainly welcome you there. let me ask you about hydropower. i mentioned that in my opening statement. this is one of those areas when we're talking about renewable resources. i certainly classify hydropower as a renewable resource and want to work to make sure that that is clear in our policies here. but funding for hydropower is down 66% at the same time that all the other renewable accounts are slated for an increase. both you and the president have made statements supporting the growth of hydropower here in this country. but it really appears to me that

we're leaving hydropower behind in this budget. can you address that. >> i would divide hydropower into -- first, we have to make really tough decisions. the thinking behind hydropower is the following. first, we don't anticipate any new large dams being built. there is potential for hydropower in united states of two forms. one is what i would call run of the river generation which we think is environmentally compatible. also turbines on existing dams built for flood control where we don't have turbines where it is economically feasible. those are areas which are very mature technologies. again, based on the philosophy should we invest -- we've diverted wind research from onshore wind to offshore which is not as mature a technology.

that's one class. the other class of hydropower is essentially what i would call kinetic devices, hydropower that tries to extract energy from wave motion, tidal motion, things of that nature. we have a program that we've invested in and we will continue to invest in it. but we feel in these severe marine environments, while we will continue to invest in it, we don't see in the near term in the next five or ten years these things taking off. we hope they do. if it really looks like some of this hydropower attempts do look more promising, we will respond. that's the thinking we were going through. >> i think the concern is that the funding is pretty anemic. it is not only the conventional, but in the marine and hydro kinetic technologies as well. this is something i know senator wyden and i have had an opportunity to be in discussion about.

let me ask you in my remaining time about a budget increase, a $2 million increase in natural gas technologies r&d. it's my understanding that this effort would fund an initiative with epa and usgs to look at the impacts of fracking. we had -- the president's advisory committee came, reported to us, had a pretty comprehensive i felt report. they presented 20 specific recommendations for how any impacts can be mitigated. so i guess the question to you is what was the flaw in that advisory committee's report and recommendations that you felt were insignificant and now warrant a second investigation that we need to increase the