is. financing is really crucial to our energy future. would you speak to the fact that we're at really critical juncture here in regards to the ptc, the production tax credit. it's been very instrumental in the expansion of wind. the deployment around our country. every state has a stake in this. whether states are producing wind in any significant amounts because of the supply chain that's developed. this very important policy expires at the end of 2012. would you speak to the ramifications if we don't extend the ptc in the time frame that we have left? >> yeah, very quickly, i think the things like production tax credits are a way to stimulate moving forward to get deployment in the marketplace. and because europe is -- i would

say even perhaps in worse economic shape shape than we are and you see spain with the subsidies for renewals that that's a diminution of the market. but it's the local markets that actually help stimulate manufacturing in a particular country. and so the -- and this is why when spain took away their subsidies in other countries, china putting in feeding tariffs for their market for wind and solar. so they ratcheted it up. they need a whole market to make sure that they're going -- they want want to catch up in wind turbine technology. they're becoming a dominant force in solar technology, but they see both of those at risk. so in -- as we saw europe's

subsidies decrease, okay, we want to develop our market. and the world is expecting this year that china will be the biggest deployer of renewable energy in the world. let's go back to the united states. if we don't have a whole market for these things, industries would not be motivated to develop manufacturing at home. they would not be -- they would be less motivated to develop those technologies. the next generation of solar, for example, you know, inral was the developer essentially the veteran developer. there's a number of solar companies making things from the catral technology. those technologies are continuing to improve. one doesn't know if silicone or catral technology, but they're certainly a player in the field and in a competitive race. so i think to have a market for

clean energy standard, those are mechanisms that can stimulate private sector investment that then stimulates manufacturing in the united states. and this is why, yes, china wants to export, but they also realize that we have to create a whole market as well. it's this mixture that they -- >> and you're employing if we don't extend the hpc that home market mission that we've agreed in a bipartisan way is crucial? >> well, it's who goes through -- it goes through how do you get a market draw, how do you help bring slightly lower cost financing, all those things. you talk to any supplier of wind. they would rather set up a supply chain in the country where the things are being installed. this is heavy stuff and so in the solar world, it's more like a commodity that can be shipped

worldwide. but it's going to be heavily influenced. as i noted before, wind technology is getting very, very close to price parity with new gas. let me be careful. new gas is considered, you know, if you average over the next 10 or 20 years this is what it's projecting. solar has dropped by more than 75%, the solar modules have dropped by more than 75% in the last three years. everybody anticipates another 50% drop in next five to eight years. so solar is competitive with any form of new energy. so we need to spur this market because this could be -- this is clean energy without subsidy that the world will want. and as i said repeatedly, we're either going to be buying and selling and i'd rather be selling. >> we always would. on the critical minerals hub,

what are you doing at d.o.e. to ensure that the labs, university partners and industry are working to on the hubs? can you give a brief answer? >> very brief answer, even the desi o a hub, they have to come in with the design and what are they doing at the get go to have industry and then the nationale? i was just visiting a hub. in competition for the nuclear reactor simulation. it was wonderful because they said what are the problems that industry is interested in? let's say a premature ageing of the fuel rods. how do you extract more energy from those fuel rods? how do you make those -- the reactors safer? those are the things that industry actually sits with every day and can you simulate this? can you simulate erosion processes that you see? from the very design it was we can use the powers of high

performance computing, the national labs to help industries solve these problems. and so the hubs are specifically designed for that. the other thing very quickly i should mention is that we have also been easing the way to have technology transferred from national laboratories and universities, but national laboratories since we helped control the technologycieswe ha very exciting meeting about 250 people attended, people from industry, on the materials you would need for solving a lot of the energy challenges. this is lightweight steels and alloys and composites and everything. because it's going to be dominated by new materials. 250 people came. a lot of companies and excitement.

immediately the first week of payoff was, you know, venture capitalists are inviting people to come. this really work, we're going to othis too. we have another on advanced computation. how that can help in the industry. just tie the -- so the people in the national labs know what the industry problems are and that they can be excited about helping them solve those problems. so this again is something that's -- it has been occurring over the last year. >> i take from you this is really important. you're really focussed on it. >> yes. >> senator manchin? >> thank you very much. i know it's been mentioned before, the president in his state of the union address says that the country needs to develop every available source of american energy, a strategy which all agree is cleaner and cheaper and hopefully keeping the jobs that we all have.

let me show you a chart we pit together and this is taken from the eia, your own department, showing where we are as far as the first through 2010, 20% is in nuclear and oil and other liquids. when we get to 2025, 27% will be coming from natural gas. renewables 16%. coal and steel, 39% and the rest at 18%. with that being said, the president's budget basically had 2.7 billion that you all submitted for the energy efficiency renewable energy at 47% increase from current levels. if you'll hold this up, so you can see the comparison. stand up. this is where your money is going. this is what you're going to get out of the investment. this is by your own -- and then you have the office of nuclear energy. nuclear is right here. that's where you're going. this is where you are.

you have cut 19 -- i mean, the greatest cut has been right here. and you're still going to be dependent on it and we can do it much cleaner. i can't figure the rationale. what i would say when you look at -- take all the above, you look at the energy strategy when cutting funding to resources that will continue to provide the energy we're dependent upon by your own estimation. doesn't make sense, sir. doesn't make any sense at all that we can't do it better and cleaner and work together because you sure are putting this out there that we'll be able to depend on it. we need it. so i don't know if you have a comment on this in relation. it seemed like there's not a balance here at all. >> well, what we're doing, as you know during the recovery act there was a very large investment in clean coal partnerships in helping test deploy some clean coal technologies. but unfortunately, a lot of the companies who are -- who had

supply matching funds, at least 50%, have pulled out. but there's some hope and we're still pushing this as much as we can. because we do believe that we have to develop technologies to use coal cleanly. which means not only of the normal pollutants but to capture the carbon dioxide. however, because of this changing landscape of companies not wanting to invest in large projects, sometimes hundreds and millions to billion dollar projects, or multibillion dollar projects, but we see a path forward in having carbon capture utilization -- >> i hate to interrupt, but our times are so limited here. that's very important. there's no coordination as i can see from the environmental

protection agency trying to work with you all to work policies and use the energy dependency we're coming from. what we're asking for is somebody has to be talking to somebody, coordinating it, to be able to use it and use it cleaner within the environmental standards we're settling. but there's no one working together. last year when you came before us, you said the department of energy was eager to promote energy that bend -- blended bio mass and then you said coal to liquids with carbon capture and sequestration makes very clean fuels and then once you start to blend in bio mass it becomes a real plus. it becomes carbon neutral. so for that reason the department of energy is eager to promote that type of research. last year your budget had $5 million in funding for that budget. this year, zero. have you changed your position?

what is the administration's position now and why would you have such a reversal? >> i'm going to have to look at that and get back to you on that. i do think -- i do think that nicole to liquids with carbon capture and as you blend in biofuels, and this is also true of coal firing bio matter with a coal plant and if you capture the carbon dioxide after a certain percentage it does -- it goes with the carbon capture. it actually goes negative so you're net sucking carbon out of the air. >> right. so i think you testified last year, we have people wanting to do this type and the road blocks are insur mountable because it looks like the administration is saying one thing. but they're pushing and promoting because of your -- where you're making your investments.

i think this shows completely where you're making your investments without taking into consideration what brought you to the dance and what you're expecting. if you look at natural gas and coal and what we have there, you're talking about 66% of the energy for the next two decades with very little money going into them. >> well, as i said, the research for carbon capture and storage technologies we can find, when it gets to be very expensive is on the deployment side. this is a chart of electricity which is a major part of our energy, but about 38% of our energy is from oil. and if you took -- as i tried to point out before, our budget doesn't reflect, therefore, the dollars go into the percentage. the oil industry is a very mature industry and we don't think even though it's 38% over total energy budget, we're not

going to put 38% over the d.o.e. budget into that. we do think think that getting coal clean is -- >> enhanced oil recovery, so many things we can use it for. >> i absolutely agree with you. >> but your budget doesn't reflect that. >> well -- >> i know we have a difference. thank you. >> senator shaheen? >> thank you, mr. chairman. thank you, mr. secretary, for being here. i for one would never say that you have deaf ears. i have found you to be very responsive, so i appreciate that. and i want to pick up on the line of questioning that senator udall was pursuing relative to the production tax credits and the 1603 program, the advanced manufacturing program. because i was pleased to see that the budget included continuing those programs and expanding them. and we have some real success stories in new hampshire

under -- at least two of those programs. we have a company called revolution energy in my home up to of dover where they have used the 1603 program to put solar institutions in schools and saved a significant amount of money. we have a wind farm in a community in the western part of the state and one they're working on that have used the production tax credits and it's made a difference not just in the jobs that go into building the wind farms, but also in reviving the communities because of the economic activity that goes on around those projects. so i think they're very important and i agree with your comments about the importance of continuing these investments in these markets. and have been concerned as i know many of us in the senate are about the fact that these are going to expire at the end of this year.

at this point, the extension of the payroll tax cut and unemployment have not included a package of tax extenders that address these taxes. so can you talk a little bit about adding to what you have said to senator udall about what happens to the market when we see this kind of interruption in support for these new energy technologies? >> well, i think as you talked, i'm sure -- i know you have as you talked to industries out there what the industry wants more than anything else is they want to see stable government policies. they don't want to see on again/off again. they want to see something because a lot of these investments just to plan them and get them permitted and licensed could go well beyond a two-year cycle. and so the production tax credit

and the 1603 have by most people's accounts, not everybody's, been very successful in stimulating investments in these new clean energies. and with the end of the recovery act, the administration is very concerned about a rolloff of the investments and you see this in the financial newspapers, at bloomberg, all those things. that there's going to be a real concern. is it just going to roll off and stop? and again, i go back and reiterate that it's very important that america develop a market for the development of the industries of manufacturing in america. you know, one of the great things about the u.s. automobile industry is we had a very large home market and that actually stimulated a lot of the

development of the automobiles. >> and is it fair to say that if that uncertainty exists because we let these tax credits expire that there's a good likelihood that we're going to see a number of jobs lost because of that? >> yes. i think there are early returns on that already because, again, if you read the financial pages, the various newspapers around the country and around the world where there are continuing policies that allow investments, you see growth and otherwise there's a pulling back. >> i was also very pleased to hear the president in his state of the union and to see that in action as well the commitment to energy efficiency which is something that i believe is very important. senator portman and i have a bill that addresses energy efficiency and the industrial sector and government and buildings. but one of the best ways to

encourage energy efficiency is by supporting the expansion of cogeneration or combined heat and power. these are -- the technologies used are generally off the shelf. they exist right here in the united states. the jobs that are created are here in the u.s. so can you talk to what the position of the department is on combined heat and power and how you address that in this upcoming budget? >> we are very bullish in combined heat and power. you know, in today's modern let's say gas turbine generation, you can get 55, 60% efficiency in converting that energy into electricity. but it's at best 60% efficient. you know, i guess some companies claim 61% or 62%, but i'm not going to quibble. in combined heat and power you go up to 80%.

now, be now where we think and there is any way to encourage people to do that, that would be great there is also new ideas and new innovations being deployed now that seem to work. here is the issue. sometimes you want the electricity, you don't want the processed heat. or maybe you want the heat and you don't want the electricity. i was visiting a project we supported in recovery act funds in houston, texas. it powers this collection of medical centers that is about the 12th largest city in the united states, just the medical centers. everything is big in texas. and anyway, what they had is they had a very efficient gas generator, but single cycle. they had high temperature processed heat that could be used for heating or air conditioning. now the beauty of what they did is they took that processed heat and they used it. you can actually use heat to cool. so they use to it chill water. and they restore this cold water

in this big tank right there. and they found that it took less than 10% of the energy even in a hot houston summer day to keep that tank cold. and so they would run it so that that would balance. it's like a big battery. it's a battery of heat, that they would use to air condition their complex, okay. so it was very cost-effective. so they were operating this plant 80% efficiency, recovering all of that, very fuel efficient. and again, drives down the cost to their customers, the medical centers, the hospitals. and so that's an excellent example of how combined heat and power can be used in way, i mean buildings, new buildings now, many of them, especially if you have real-time pricing of electricity, they use the electricity at night, chill some water, maybe even turn it into ice. use the ice to cool the building so you're buying electricity where it's inexpensive, you decrease your electricity bill.

the asset of general are used getting better return on investment because you're using the asset in a more even way. and so the good news is -- so this is all about energy efficiency, essentially. and so combined heat and power in any city, any university, any hospital that has an integration of steam and chilled water tunnels, or a big complex could use combined heat and power. and we'd love to see it going that direction, because now you're going 80% efficiency. >> thank you. >> senator portman? >> thank you, mr. chairman. and dr. chu, thank you for being before the committee again and for working with me and other members of the committee on some important projects. i like some things in the budget. one is energy efficient as senator shaheen has just talked about. and with buildings using about

40% of the energy in this country, i think what you're talking about there is consistent with the legislation, which as you may know is introduced in the house, a companion bill yesterday. so we're hopeful that s-1000 can make its way to the floor. i appreciate the support of the ranking member on that as well. i'm concerned about some other aspects of the budget. but let me focus on something else point of view, which is a small modular reactor licensing technical support program. you funded that at $65 million. and these smrs i think are really an exciting innovation, and as you know, have safety advantages as well as economic advantages. i know that nuclear regulatory commission has just licensed a plant and another one coming with larger reactors. but it seems to me that this is a good investment and something that will be very beneficial to energy mix going forward. so i thank you for that. with regard to carbon capture

technologies. i don't know if you've had this question from other colleagues and i apologize if i'm repeating something here. but the ccs programs i think are still lacking direction in this budget. i don't think there is a pathway here as to how long and how much it's going to cost to develop carbon capture technologies. i would like to see the budget laid out. but in the absence of that, i would hope that the department would do so. i did introduce an amendment last year that would require the department to assess how successful the ccs programs have been and how much time and what the costs would be to get them to the commercial level. and senator shaheen, again, was part of that in adding an assessment for what some of the barriers are for large carbon capture and storage. so my question to you there would be what is the pathway and what can the department give us in terms of information in terms of what your scientists believe is a way to move to commercially viable demonstration projects. >> sure.

first, the carbon capture technologies that are being tested today, and i'll divide them into two categories. this is after combustion you capture the carbon. there are mea type technology or chilled ammonia type technologies. those are being pylon tested. they're by and large in the commercial sector. we feel that we would like to develop less expensive means because if you make -- if you put in an estimate of how much it would increase the electricity bills, we think that this would not -- this would not spur not in the united states, but it would not spur china or india into using these technologies. so we would like to improve them. we think there are potential ways of improving them. one of the potential ways is to -- these are your very large high surface areas. so we're investing a lot of research to decrease the size of

these capture stacks. totally different ways of doing it. so instead of that being absorbed in certain material, you can use small particulate matter at the nanoscale. so we're investing a lot of research in that we're investing in ways -- another way is to separate oxygen from nitrogen. >> dr. chu, i guess what i would ask, this is the danger of having someone who actually knows something about science. >> i'll try to suppress. >> i guess i would ask, if you're willing, i'll submit a question for the record. i know a lot of members of the committee would be interested in your response. specific technological improvements that you would recommend. but also just what the department sees as the pathway forward here. and i don't see it in the budget again. i think it would be very valuable to the committee. >> it's in a short very brief time, i say the path forward is to take advantage of the industry's interest on the piloting side in the carbon capture utilization. >> we want it to be

cost-effective. it seems to me there is an opportunity here. and we're not taking advantage of it. with regard to uranium enrichment, i appreciate the fact in the budget you do talk about the need for us to have a domestic source, and in fact provide in the defense nuclear nonproliferation account $150 million for domestic uranium enrichment development, demonstration, research. you and i have talked about this a number of times before. it's interesting you include it under nsa rather than the nuclear energy account, because i think it would also be appropriate under the nuclear energy account. is there a reason for that? >> no, that was signed by people more like you than me. >> uh-oh. >> no. >> we're having -- >> i see what you're saying. >> no. i'm just saying you have to park it somewhere. it was certainly appropriate to put it in nsa budget. an i do think there are some

appropriators are interested in knowing which account it's going to come out of and where it's coming from. i think a conditional loan guarantee would be a far better solution. but given where we are and needing to have a domestic source of enriched uranium, i think it's important we move forward. and the more information, the better. with regard to enriched uranium, if you could just talk for a moment about why you think it's so important, obviously we need it for our nuclear power plants. at one point we had a majority of the enriched uranium in the world being produced by the united states. i think we're down to about 25% of the world supply of enriched uranium now. and maybe the place to start is where do we get it now that we aren't producing nearly as much as we used to. >> well, there are two parts to this. one is the military side, the secured side. we have international treaties which we want to abide by, which

says that the uranium used in nuclear -- for nuclear security purposes actually has to be tha. it's a very wise treaty, because you don't want one country to be using technology of another country to enrich uranium that they can turn into weapons. >> right. >> so we need our own indigenous source of uranium for our -- to maintain our stockpile. also uranium that we need to produce tritium for the stockpile. then there is a larger issue about the civilian nuclear side, much larger amounts of uranium. we think that if the united states -- certainly the united states will be a player. the united states is well respected for its safety record, for its care and the way it handles its own civilian nuclear industry, and for the