should go in. we're going to be very sorry five or ten years from now. i want stability but don't want the government to be pushing the industry in a certain direction and those are my recommendations for the u.s. the main point being that, let's not forget we're outperforming the energy by a wide margin. thank you. >> well, thank you very much. let me start with a few questions. this analogy to what was done with sematech i think is an intriguing one. my recollection of that experience was that the industry itself, the semiconductor firms themselves and others came to washington and basically said we need -- we need to do this. we want to do this. we need government assistance to help us get started and we did

that at the same time, the original members are u.s. companies. i think nac applied for membership and was not permitted to be a member at that time. was my recollection. i guess what i'm now sort of struggling with is, if there were to be con sor sha of companies to pursue their technology in other areas, how do we go about identifying that organization, is there a critical mass of energy that are u.s. based or that have operations in the united states that would want to do such a thing? i guess those are some obvious

questions. mr. wolff, do you have thoughts on it? >> just to begin, and i'm sure mr. holladay has some current thoughts on the subject. sematech was industry-driven, you are quite right. both the vertically integrated companies and the silicon valley companies, texas instruments as well found that they were not as efficient of producing a good of a product as the japanese. it's one thing to say we don't have the quality that others do and we needed to drive our manufacturing efficiency, our toolmaking, our processes and the way to do that was in a hands on laboratory environment that was a factory that produced

something and not for commercial use but to learn how to make better chips. you're right that this was a u.s. effort entirely. it was funded by the department of defense $100 billion a year as has been testified to for five years and the industry also matched that and it was major effort and paid off and the industry has become global. there are foreign participants in semitech today and there is still and the benefits for the world to be dramatic in turns of the information and enough of a consensus and that would be a

sematech initiative. >> mr. holladay, what's your take on whether there is a critical mass of industry interested in anything comparable to sematech or any collaboration to improve their competitiveness? >> yes, sir. especially in the supply chain. the supply chain is really desperate to be able to have especially access. the manufacturing development facility is critical. having a facility where people can do not lab-related work but can actually do production-related work and develop production-style tools and test production materials and is critical to the supply chain to develop these more advanced materials, these more advanced tools, and have access to those kinds of facilities. >> and that's what you said you have been tasked to do or are working with the department of energy to do? did i understand that? >> yes. in the sigs and silicon valley area. we have a great opportunity.

it's the first time that sematech has been replicated in 25 years and the department of energy has created that around the technology. we're working to expand that. >> it strikes many he that at least several of you, this point about maintaining in the u.s. a manufacturing capacity has been made and that the ability of the u.s. to remain a leader in research and development is not going to be possible if we don't have that manufacturing capacity in these technologies. i wonder if anybody wanted to elaborate on that. mr. prestowitz, you made that point, i believe. >> yeah, i did. i think it's an important point. i think there's a false sense widely spread that is a straight

line. you know, you do basic r and d in a laboratory someplace and that guess to commercialization. and that's not really how it works. it's a typical -- very often it's somebody in the field that comes up with an idea that they throw in the lab and back and forth. and if you don't have the back and forth capability, i think that we've seen that in so many instances that what happens next depends on if you don't have the step before, then you don't have the next step that happen and it's pretty established economically and scientifically

and that's the point. >> mr. holladay? >> they understand the innovation from the research side. if you don't have the manufacturing side to really understand the innovation from the research or have an industry pull and market pull mechanism, then you lack that innovation and as you lose the manufacturing, you lose those opportunities. >> mr. wolff? >> there's a wonderful book thaw may have red by john gertner that came out this year and it was engineers and basic scientists driven by the need to have manufacturing outcomes

including ultimately the transistor which, of course, gave birth to through bob noyste and others to the integrated sir kit. so we don't have a bell labs today other than what doe and sematech can do. those are our current idea factories. >> senator murkowski? >> thank you, mr. chairman. i suggested in my opening that the united states was doing relatively well in this raie ra. mr. scissors, you are ahead. i guess the question to you would be whether or not it's -- it is constructive to even talk about this being a race for the clean energy title.

is it fair? is it constructive to say that we are in a race? and then if it is so, if it is appropriate to refer to this as some kind of a competition, which everyone has used that word and we all recognize that words matter here. if this is a competition, what's the metric that we use? how do we judge who is winning and who is losing? is it a question of how much money has been deployed? is it the generating capacity that is then put in place? is it a calculation of a reduction in emissions? how do we even measure this to know what is up, who is down? and i throw this out to all of you. because i think it is an important part to this discussion is it all about how much money is spent or is it the outcome at the end? mr. wolff? >> well, if it's a race to

deploy new technologies, it's a useful thing to do. you ought to be successful in it. china needs to do more for reasons of environment and to change their energy sourcing. are there places to collaborate? clean technology in pv or wind. i'm struck by the fact that they come back with iphones and ipads and at least on the invention side and a lot of the benefit and in here it's not about a consumer and consumer products

and consumer electronics. whether we can have the ability to generate not only the r and d and invention but commercialization. >> let me ask -- and maybe this will give better definition to the others. is it about just deploying it, making sure that you have the wind turbine up? but if it's not connected to anything, if it's not generating, is that something, then, that says china is more successful in deploying this? again, what are these metrics? mr. wu? i'll just go down the line here. >> thank you for your question. i think that's a very good point. there's one metric. and if we may offer one suggestion, it's grid parity that matters. being able to deploy clean energy at a cost that is a cost

effective way that is competitive with fossil fuels. so i think it's not about how many turbines you put up every year, if they don't work. it's about -- it's about whether or not you can do that in a cost effective way and you can produce energy from it. that's cost effective for consumers and for the economy. >> others? mr. prestowitz? >> well, i sense cross talk here when we say we're doing better than the chinese. i mean, if we're talking in terms of reducing emissions, the u.s. and we have a a great boom from shale gas and thank god we've had it and rising

conservation measures. again, very positive. it's a little different than the thank you emissions of the shale gas, you may want to have the potential to reduce emissions by solar or wind power or battery-driven technologies. and if you do want that, or if you think that those technologies also have potential new knock-on capabilities for the future and you want that for the future, then you need to question how you are doing in that. and then your metrics, how you are doing in that is, well, how much is being invested, what's the state of your technology

versus the other technology, what is the rate of deployment, what's the rate of innovation and these are all pretty measurable things. and the measurements that we have so far seem to indicate that the chinese and others -- again, i don't want to put this on the chinese. but germans, taiwan niece, many others, have advanced fairly rapidly and in many instances more than we. are we in competition? i have to say yes. these industries are characterized by economies of scale and by imperfect industries. typically if aircraft industries or auto industries or capital intensive industries and in those kinds of industries, if

you're not keeping up with investment or r and d, typically you're falling behind. that seems to be the trend that the u.s. has found itself in. >> your time is expired but i've got two more that i'd like to hear from, if they will. thank you. mr. holladay or dr. scissors? >> i guess the best way for me to put it is is to describe what mr. smalley said, if you can find the solution to energy, you have the solution to many of the top ten problems that the community faces over the next 50 years. right now it's in the early stages of the life cycle. its bright future is still to company. the technologies coming today are not the technologies in the

upcoming years but we'll come to that point. it's going to be a huge market globally. it's critical that the united states be a leader in that next generation technologies and that we position ourselves to do that. so -- >> dr. scissors? >> i know what metric we shouldn't use, which is how much money we spend. most people would say spending more money is bad unless you get something for it and the chinese aren't. and so we want to save money. we want to spend as little as possible and do as well as possible. the idea that somebody is spending more money than you is a good thing does not make sense to me. when you look at how they are performing, we started -- why did we start with clean energy? we started because we are concerned about carbon emissions. it's not something to just dismiss and say, that doesn't matter now. well, it does matter and the u.s. is doing pretty well and china is doing terribly. that's a metric. that's not the only one but it's one. energy efficiency, i mentioned before. so different people, different members of the committee and

congress are going to have a different metric gas is an excellent example. they don't have the technology for it. we do. are we going to lose the next one? it's possible. we're not doing perfectly but the amount of money that we're watching is not a way to measure the outcome. >> senator wyden? >> thank you. it's been an excellent hearing. very good witnesses and let me start by saying, i think the principle question for our panel and for our challenge in the days ahead is how our country is going to respond to what has been described as some experts as china's green mercantilism. there's a new paper out this morning and i would ask for

consent to put it into the record that they in the paper define green mercantilism as essentially policies that give other countries an unfair advantage in terms of our interests, allow them to boost their exports, limit imports of clean energy technologies, and mr. wolff, for me you really summed it up when you said in your testimony, you asked essentially, is it acceptable for chinese industrial policy to shape the u.s. economy? and i think that that sort of incorporates the essence of this issue with respect to green mercantilism and it also goes beyond the trade issue, which i think is important for us. i also chair the finance committee on international trade. i'm interested in expanding trade. i don't think free trade means

free-trade from rules and what is appealing to me about the way you asked it, it gives us a chance to shape the challenge both in terms of trade and other kinds of issues. so why don't we start with the other four witnesses responding to mr. wolff's question. his question was, is it acceptable for china's industrial policy to shape the u.s. economy? give me your response to his question and if you think it is unacceptable for china to be shaping our policy, what do you think we ought to do in a proactive way to combat it. start with you, mr. wu. >> thank you for your question. no, i don't think it's acceptable. i think the point that senator murkowski brought up earlier,

the answer to that is also no. the fact of the matter is, the economies of the united states and china are different and the reality is that china has a vast amount of energy demand that is still growing and they have a very high reliance on coal at the moment and it's a very different situation to what we have here in the united states. and i think -- i agree with what dr. scissors mentioned earlier, the question about gas, which is, yeah, i think china is looking a little bit to hand it over to the united states with rashd to our ability to exploit shale gas which china has reserves of but lacks the technology that we have done here in the united states. so i think the answer is, no, i think we have to take very different -- a very different look at the way the economies of the united states and china are and finally i would just like to

add that with regard to metrics, and it's done very well, it's manufacturing. china makes a lot of things. not just clean energy. goods. it's exploited its advantage, which is to manage solar in a very large scale and has done so in a cost-effective manner which we can argue if it's good or bad and for who and whom. one benefit of that is it needs to reduce it for domestic consumption. >> mr. prestowitz, i know that you do not think it's acceptable for china's industrial policy to shape the u.s. economy. what do you think our country should do in a proactive way to combat it? >> well, i think we have to use our heads. i don't think that it's

acceptable and i don't think that everything china does is not necessarily right. so i think what is required is for us to spend some time thinking hard about what is it that is really important to us. and then take the measures that are necessary to counter the negative impact on us achieving, for example, an element policy tends to be excess investment and typically in the u.s. we wait for an effective company or

an entity to file and dump a complaint before we know anything about dumping. we don't have to. and one thing that i've advocated, other countries have and look at the extent of the over investment and self-initiate and they have currency they typically, not just china and ask for permission sematech investment

taxes investment abroad. and world champion. attracting foreign investment and we could learn well to copy what singapore does. it's a matter of what is important to us. okay. what's our strategy. and a combination sticks to get what is important for us. one point -- and to emphasize, typically, i know alan and i have been involved in so many of these discussions for a long time. typically you get into these debates in the administration, and the argument is, we don't pick winners and losers. we should be intervening to

subsidize corporate benefits and what's lost in that discussion is that in a situation in which you're facing an active industrial policy abroad, a decision not to intervene is a decision. you know, a decision not to pick winners and losers is a decision to pick a loser. you are not going to be in that industry. that, i think, doesn't get understood, typically. >> i know my time is up. if we could just -- mr. holladay and dr. scissors, again, responding to what mr. wolff said. >> we need to be focused, we need to have vision, we need to understand where our country is going and where the global technologies and market are going so we can be strong and successful and to build on the not picking winners and losers. the consortium model is good for

that. you better leverage the universities and national labs to really impact the industry and it's critical that we do that. >> dr. scissors? >> i have one objection to the green -- the word green is unnecessary. mercantalist and they are big. we can not avoid the china policy affecting the u.s. economy. we don't like it but it's true. to me the best response is to get them to do less of it. we're not going to get them to start and that should include threatening them. and where that isn't going to work, sometimes there are subsidies that help us. they make things cheaper for american consumers. sometimes they hurt in ways that we can't respond to. i think my colleagues on the panel have said a variation of the same thing. we need to identify not everywhere they affect us. no avoiding it. where we don't like them

affecting us. that's a subset. here's a group of things. where can we do things that are useful and really matter. >> thank you, mr. chairman. >> let me ask another question. one of the frustrations is that we don't seem to have a willingness to do on the procurement, government procurement side but other countries do on a regular basis. for example. china is not a signatory under wto. so they are not obligated to give fair opportunity to foreign producers of products that they might buy through their government organizations. should we be doing more with our

buy american policies to try to support u.s. industry? i mean, i'll give you a specific that i attended a groundbreaking ceremony last year in santa fe and, you know, the cells were made in china. we make them in mexico and other parts of the country and i'm sure they were chiper and purchased by the contractor that who was hired by the governmental agency that was putting in the panels. should we be doing more to urge that the u.s. government and entities pursue a buy america policy when it comes to u.s.

industry? mr. wolff? >> i think that the fact that in the case of semiconductors, government demand initially drove the startup of this industry, government demand started titanium. government demand didn't demand the flight space program really gave us our start on nanotechnologies. government demand gave us internet. it gave us new materials and gps. so intelligent use of government demand is, i think, a very important component to national policy. the -- it has to be balanced against cost. we're not interested, i think, in having an inefficient procurement system but it can't be the only cost. it has to be maintaining a