things, it would be -- it could be as significant or even far more significant than the technology that was developed for shale gas. so we are -- we're looking forward to the test. but the test is one part of a program going forward. before -- quite candidly, before industry would want to begin investing in it on their own. so again, it's this balance. right now industry is not -- they view methane hydrates more as something that plugs up their lines. rather than a potential source. and just like with shale gas, if it looks like it can be developed and industry gets invested in it as part of the strategy, then they can take it over. right now the program being done in alaska is actually being directed by a d.o.e. scientist. so it is a research project. but it's just one part of that

research project. after this stage, we see it continuing. >> well, and i think that's important, because we recognize that apparently there is $12 million now proposed in this budget for all methane hydrate research next year. it's my understanding that this test is going to -- it's going to be more expensive. so the commitment from d.o.e. to continue that i think is going to be important. again, we'll follow up on this -- this conversation. thank you, mr. chairman. >> senator wyden? >> thank you, mr. chairman and secretary chu. you've been a patient soul. you've sat in that seat for 2 1/2 hours. as you can tell up on this side of the dais there are pretty diverse views with respect to energy. folks who care about wind and solar, folks who care about coal and nuclear. so there is a wide variety of opinion. and i want to ask you about an

area that i think would be unifying and something that i think you in particular could champion. and that is energy storage when you look at energy storage, this is something that makes wind and solar, for example, more economic. but it also is hugely beneficial to base load technologies like coal and nuclear, because it can help them meet their peak electric demand. and it also helps the transmission system operate more efficiently. so you've got something that is crosscutting in terms of technology, literally benefits every corner of the country. in other words, i can't find a corner of the country that wouldn't benefit from it. and yet we haven't been able to get in place a clear strategy to tap the potential of the energy storage. a couple of years ago, dr. kunin your science adviser, very distinguished individual, i asked him about energy storage. he said well, we're going to wait and see what happens. and basically we have gone through a variety of debates.

i'm concerned, for example, that in the office of electricity in this budget, it looks like energy storage is cut. but i want to set that aside. and ask you what would it take to get you and the department to lay out for us a significant strategy to tap the potential of energy storage? i mean it has the real potential for production and distribution. it's not consumption. it's almost the other side of the coin of energy efficiency. and it could be something that would be backed by democrats and republicans. it would be crosscutting in terms of technology. and yet so little has been done to lay out opportunity for real strategy here. could we persuade you to do that? >> you don't have to persuade me. we are doing that. we -- this is one of the reasons why one of our hubs is an energy storage hub. not only for automobiles, but for utility. and we made it very specific.

and it's not only batteries, it's compressed air. it's thermal storage. i just talked about how you can use nighttime energy to process heat. sometimes when the wind is blowing, there is nowhere to take that electricity. you can put that into lots of kinds of storage. either hydro storage is something i've been pushing very hard, the bpa to start doing, pump from one dam to another dam so it has minimal, essentially no environmental impact, but it is a form of storage. and we have a target. we know that energy stores at the megawatt and the megawatt hour scale would have incredible applications in the electricity distribution system. it would make our electricity distribution system much more efficient, because all the little ripples. you have a few major generating stations. it goes to distribute out here. you purposely overfill today.

and if you had little batteries of, you know, kind of that size scale popped here and there, it would have a profound difference. right now the energy storage is about $300, $350 a kilowatt hour. at $100, $150 a kilowatt hour, it goes viral. and so energy storage for reniables, energy storage for making more efficient distribution system, energy storages for a sounder, more robust grid are all part of that. so we have a hub for that. we are trying to coordinate. and we're not only looking at battery, we're looking at compressed air. we're looking at thermal storage. >> dr. chu, if you could send me the document that reflects this strategy, that's what i'm really asking for. i follow this. all i can see in terms of documents is the proposed cut in storage at the office of electricity. and i wasn't interested in

debate that. what i wanted to see was something that would lay out a strategy. as i said, i've gone back several years with dr. kunan and others, and we haven't seen such a thing. if you can get that to me, we'll discuss it back and forth. but i really want to see here that i think would be unifying in this committee is an actual strategy that everybody would understand what the potential is and where we want to go. thank you, mr. chairman. >> just ten seconds. yes, the oe was cut because what we decided was it was much more appropriate. it's increasing dramatically in offices of science and ere. so we were trying to consolidate where -- where we think it would do the most good in terms of the level of program management. so overall, if we gathered up all the pieces in energy storage, it's actually going up. >> senator portman? >> thanks, mr. chairman. and to the question whether

energy storage is part of efficiency? yes. it is. and part of using our system more efficiently. earlier we talked about your commitment to a new enrichment technology that gives the united states the ability to get back on the cutting edge in terms of our technology, create great advanced manufacturing jobs. but also be able to supply our energy needs. and from a national security point of view, to deal with our need for tritium for the nuclear arsenal which comes from enriched uranium. that tritium comes from domestic sources of enriched uranium, is that correct? >> correct. >> and is that policy of this administration that we should have a u.s. source of lowly enriched uranium for tritium production at tda. >> it's not only the policy. by treaty, we're obligated to have u.s. sources to create our treaty. >> so this is a requirement that we have a domestic source. with regard to other activities,

it's a huge campus. and would once again extend an invitation to you to come out. i think you would really enjoy seeing what is going on there and see the incredible work that has been done over the years at this plant. but there is also a cleanup of the existing technology, which is the gas diffusion technology still being used at paducah, but now at piten through an effort that administrations through the years have supported decontamination and decommissioning that is going on there are actually 1950 workers involved with that. and i notice in the budget and am very concerned about it that there is a 33% cut from 190 million to 127 million. will this reduction in funding allow the department to maintain the commitment the department has made to accelerated cleanup that was made i think back in 2009? >> well, we are looking very hard at this. and yes, there is a decrease in

the budget. we are looking, again, at all our options, whether we can do some bartering, things of that nature. but again, we have to be very careful whether that bartering will affect the markets. and so we are trying to figure out what the tools we have how we can move that forward. >> well, in the passage, you have both barter and sold some of your own stockpile of uranium to provide the additional funding and maintain that accelerated cleanup schedule. and it seems to me that that would be the right way forward you. you say you need to analyze it more. what do you need to do? >> well, right now we have already analyzed that if we introduce into the market something 10% or below, that we feel safe that won't have a material impact on the markets. and we have not gone -- we don't

know what will happen beyond that. >> it sounds like you have done the analysis like you did it in 2011, and it went through the third quarter of calendar year 2013, and you found no adverse impact for the level. >> the 10% market, yes. >> so i would hope having done that analysis that we could move forward to give the folks at the plant some certainty, and also just to maintain the cleanup schedule on an accelerated basis. as i talked to you about, i worked a lot on the cleanup. and in the end we accomplished something great working with the department of energy on an accelerated cleanup. it was initially opposed by some people, including folks who had jobs at the plant to maintain

the status quo. but in the end it saved the taxpayer somewhere between 3 and $4 billion by accelerated cleanup. so i know there is a temptation in the budgets to try to find savings, but i think this is a place where it would be penny-wise and pound foolish. in other words, i think for the taxpayer, it's definitely going to cost the taxpayer if we get away from accelerated cleanup. i strongly encourage you, mr. secretary, to look at that analysis again. and provide the funding through the sales to keep your commitment because i think it's the right commitment. it's good for taxpayers and good for the site and good for the high-tech jobs that are there. >> yes, senator. we did do the analysis for bartter and sales at the 10% level or below. right now we see us bumping up hard against that. if you want to ask us do an analysis higher than 10%, we would be receptive. but i think senator barrasso is not here. he might represent an alternate point of view. >> that's why i'm asking while he's not here. >> okay.

>> no, i think seriously the analysis done last year was, as i understand it, conclusive as to not having a market impact. >> at the 10% level. but again, with all our obligation we are bumping up against that. so we would have to do another analysis to go higher. >> are you committed to the accelerated cleanup? >> we're committed to whatever the means we have and the constraints we have to do the best we can. and if you want to ask us to do another analysis, we'd be delighted to. >> but we certainly would appreciate that analysis, if that's what it takes to be able to keep the commitment. because i do think it's the right thing to do for the taxpayer. and it's also the right thing to do certainly to keep onsite a lot of highly skilled people who are otherwise going to be found without a job or moving on and more difficult to bring them back to continue the good work that they're doing. the other issue, of course, we're very interested in being able to take some of the

materials out of the decontamination and cleanup effort and be able to recycle those materials. we appreciate your cooperation with that effort. i know there is a concern with other agencies looking at the safety of that. but we they is an enormous and also through the processing provides good economic opportunities for our region. >> thank you, mr. chairman. >> thank you, mr. chairman. thank you, mr. secretary, for your patience. i want to follow up on what in terms of i call it retrofitting. and i started a retrofitting initiative in my state called back to work minnesota. and i really believe that this is lowgi that we -- what i'm trying to do is find innovative financing mechanisms to get that up-front money to retrofit commercial

buildings, mush, municipals, universities, schools and hospitals, et cetera, and residential buildings, knowing that it pays for itself and it puts people back to work. it puts people in the building trades to work who are in a depression or a recession right now. they need the work. it helps our manufacturers in minnesota and would do this all around the country. it's sort of part of the president's better building initiatives as well. i would like to just bring up few little areas in this. you talked about utility companies can provide the financing for this. in minnesota, we have a mandate for utility companies that they have to increase the efficiency of their users by 1.5% a year. this is a mandate that actually

encourages the utilities to find retrofits or energy efficient projects that they can help finance. i was wondering if that -- do you think there could be -- if we legislated that as a national part of maybe the clean energy standard, if that would be helpful? >> i'm not sure. i think -- i don't know whether that has chance of passing, quite frankly. but let me just say -- >> let's say it did. >> that would be helpful. here is another thing that would be helpful. it happens now in new york and massachusetts and california, maybe a couple of other states. if the regulatory agencies who set the rates say that if the utility company gets an equal return on an investment if they help a customer, a business, a homeowner and they loan them

money to retrofit that that is seen as investment of the utility company which they're entitled to a return on their investment. utility companies -- a highly rated utility company has access to fairly inexpensive capital. >> yes. >> so they're -- they became a bank for the business, for the homeowner. but you're entitled to recover for your investment in energy efficiency.r plant -- >> oh, exactly. that's why minnesota put this in. >> right. >> let me talk -- i have limited time -- p.a.c.e. property assessed clean energy financing. this is basically done for commercial buildings we say a state or a county can lend money

to a commercial building to do a retrofit. sometimes an esco gets involved in all this. but some part of the financing can be this p.a.c.e., which puts a building gets sold, that property tax continues. and again, what i'm trying to do is just find financing models for this. on residential p.a.c.e., putting a property tax on doing retrofit, to finance retrofit, the fhfa will not give mortgages to a resident -- residential -- to a home with p.a.c.e. because p.a.c.e. would get paid back before the mortgage do. you think that's a wise policy by fhfa, and is there anything you can do? i've written them a letter. would you join my letter or would you -- >> well, i've been talking to shawn about this.

and he and i are trying to be supportive as possible. i think the issue was even the lenders don't want to even be -- let's say you have loaned 200,000 to buy a home, and the homeowner wants another $10,000 for home energy improvements. and to be -- to have equal footing in the payback. the lenders are fighting back and say no, we don't want to do that. that has to be -- the p.a.c.e. is viewed as essentially a mortgage, and it has to be behind the initial mortgage. even to get it even would be of great help. so we're trying to work this thing through. but the lenders really feel that nothing should stand in the way of them and the first mortgage. >> well, very often the lender would be the city or the county. and this is when someone is buying -- buying the house, but it may be when they've been in the house for a while.

it's just about making that home more efficient, and, again putting people to work, putting people to work who are in the building trades, people who are in the manufacturing, and making that home more energy efficient, and bringing down the cost of energy in their community. >> i'd love to talk to you. the time is up. >> yes. >> if the chair would indulge me a minute there are a couple of other ideas we think are worth thinking about. on the commercial sector, there are real estate investment trusts. >> reits. >> reits. we feel all we is perhaps even a clarification from treasury that if this real estate investment trust of a commercial building wants to invest in a new hvac system or more energy efficient windows, let's say an hvac system. >> okay.

>> would you allow that to be depreciated as a capital expenditure cost as differentiated from the depreciation rate for the building? and just the clarification of that i think would spur a lot of investment. because these reits quite often own office buildings. and they pay the energy bill because occupants come and go and they don't want to simply meter all the time. and then it goes into the rent. so a very simple clarification could spur a lot of investment. because it will make sense to them. it won't cost the government any money. but that would be good. there are a couple of other things. i think if sometimes retrofits actually there is a community block that wants to do, a couple of homeowners get together and say one homeowner has a good experience, you know, i'm saving a lot of money. but now you can capitalize on it

have the block party. talk about it. make it a groupon like thing, so if you get five people, eight people, to say we will do this, but you demand a discount rate, a 30% discount on the energy ordered and the installation and everything else. because to the contractor, it's great. they send a truck out and they go bang, bang, bang, down the row. that can greatly reduce the price of retrofitting and drive it up and actually get some social awareness in this as well. but it's all about saving money by saving energy. the finance part of that, you know, if you lower the price by 20, 30, 40%, the finance decreases. go back to utility companies, companies that have access to low-cost financing. moderate interest rate is a no-brainer. you don't -- you're not out-of-pocket expenses. you're saving more and paying back the debt -- the money to pay back the debt is less than the money for your energy bill. and it's immediate jobs.

>> exactly. >> and that is immediate jobs that could be for decades, right. >> yes. >> we have 140 million homes. >> right. >> i think probably 80 million could use an energy uplift, face-lift or whatever you want to call it. so there are many things that we are mulling about and trying to get programs. and we have a number of programs to -- those are some of the ideas we're talking about. also to stimulate state and local governments, to think of better ideas. again, a lot of this can be driven by the private sector. >> absolutely. >> because energy efficiency does save money. >> absolutely. it doesn't need government money. it just needs -- but can my office work with your office? because right now i have written down reits and house parties. >> yes. block parties. >> block parties. that's what i meant. i'm glad you corrected me. thank you. >> thank you. senator hoeven, you have the

final questions. >> assuming nobody else wanders in here, which i very much hope. >> i'd like a third round on block parties. >> we'll schedule that for the week after christmas. good ahead, senator hoeven. >> thank you, mr. chairman. and again mr. secretary, thank you for being here. you've been out to our state i think several times. we appreciate it. we would like to have you back. but i really am looking for help on this vitally important issue of energy infrastructure. in our last question and answer period here, we went through pipelines. and you said well, we're trying to build all these pipelines. and you talked -- if i could finish -- you talk about all these pipelines that we're trying to build around the united states. so my question to you -- and you'll acknowledge that there is thousands of pipelines under the entire country. so why are we unwilling to build a pipeline that will bring crude in from canada and will help us move our crude in the country?

why is that? >> well, first, we're not unwilling. the president's position and the state department's position, not the d.o.e.'s, but we're not in the decision-making loop. we're asked to give technical advice on certain things. but is that they wanted an evaluation of the environmental impact. the pipelines that are being built in the country are investments of the private sector. and i see a lot of healthy movement in the pipeline construction within the united states. in large part because of the ability to get oil from shale-like rock. this is a big boon in your state. and you got to get that oil to the refineries. and this is also wealth creation. and it's decrease oil dependency, all good things. the private sector is the one that is investing in the pipelines.

about -- the only time the government actually steps in is -- well, there is ferc issues. but in terms of the one you're worried, concerned about is the one that goes across the border. >> right. >> and then that's a state department issue. >>i atoints. your technical advice, again, the department of energy. this administration's department of energy, the report i cited said that the keystone pipeline will lower gas prices, not may, but will lower gas prices, east coast, gulf coast, and in the midwest. in addition the report also says that it concludes that the pad 3 refiners, will likely consume additional can iddian oil sands well in excess of what would be provided by keystone xl pipeline. the reason i cite this is because some of have we'll bring it in from canada and then

export it somewhere else. but your own experts have said that it will be used here, and we're going to need more. not less. so it won't be exported. on your technical advice you said the department of energy will reduce prices and it will be used here, not exported. i appreciate your technical advice. i compliment you for it. second, private sector investment. this is a $7 billion private sector investment. again i go back and say given that it would bring us more crude which we otherwise have to get from the middle east or venezuela, and you know what's going on in the middle east, and it helps us with the bottlenecks. we have $27 barrel of crude in our state, unbelievable traffic because of truck traffic and oil trucks that we'd like to use a pipeline for.

not only do we have discounts for our producers, we have the consumer and businesses paying $3.52 a day, the highest it's ever been this time of the year, in our country. which hurts our economy. why would we conceivably allow this, i don't understand it, when you said we're willing to build pipelines. i don't understand it. >> well, senator, i don't know the particulars. usually when you have trucks, trucks are short-term interim solution to a region if you expect sustained oil production, they're very expensive, as you well know, as well as being very disruptive. >> i agree. which is why we need the pipelines. >> so, again, if we're talking about the trucks in north dakota and wyoming, the private sector -- i don't know the particulars about this but i think once you see a lot of truck traffic, that's almost the last resort.

it goes pipeline and then it goes rail and the last is truck. >> mr. secretary, i'm looking for help here. frankly your experts have been helpful and they've been right on the money literally. they've reported this thing straight up and i appreciate it. maybe we conclude with is you a you know in our state when we talk about all of the above energy development, we don't just talk about it, we do it. if you go to our state, you'll see wind, biofuels, you'll see ethanol, biodiesel, shale gas, oil, you'll see hydro, biomass, all of these. in other words, we're really doing it. but the reality is to get to that all of the above, that means we have to try to develop all of them, not pick winners and losers. so i'm looking for help in this endeavor. let's touch for just a minute on in-situ. mr. chairman, i may go over my time just a minute.

i hope you'll indulge me. with the development of the canadian oil sands oil, 80% of the new development is in situ, whereas instead of excavating, as is the traditional practice, you actually drill, like you drill for conventional oil. you put steam down a hole and so forth. and so your greenhouse gas emission is the same as for conventional drilling. right? so talk to me in terms of when, with canada, united states and somehow help from mexico, we produce about 70% of our crude. we add keystone we immediately go to 75%-plus and we have the opportunity for much more. we then don't have to rely on the middle east and venezuela. 80% of the new development is in-situ. which is the same footprint as conventional. why wouldn't we be trying to do all of that that we can, from an energy standpoint, from the concept of north american energy independence, isth