INTRODUCTION Mr. Chairman, thank you for the opportunity to testify before your Committee on climate change and the Department of Energy's (DOE) energy research and development programs. These programs serve a broad range of the nation's energy, national security and environmental interests. The connection between climate change issues and energy is clear: fossil fuels supply 84 percent of the primary energy consumed in the United States and are responsible for 98 percent of U.S. emissions of carbon dioxide. Today, I would like to discuss the interplay between our national energy interests, the Department's energy research and development (R&D) programs, our FY 1999 budget request, and environmental stewardship. In his speech at the National Geographic Society last October, President Clinton outlined the Administration's climate change policy framework, noting that the risks justified sensible preventive steps. Several of these steps -- making R&D investments to encourage the development and deployment of energy efficient technologies, the promotion of a broad range of energy efficient products, and a comprehensive review of Federal procurement activities to ensure that the Federal government is a leader in energy efficiency -- are advanced by the Department's FY 1999 budget submission. The enhanced energy R&D investments provided for in DOE's FY 1999 budget request will indeed result in lower greenhouse gas emissions, but they also provide the United States with many other tangible energy, economic, national security and environmental benefits. The DOE is, at its core, a science and technology agency. In the FY 1999 Administration budget proposal, 40 percent of the DOE budget, approximately $7.2 billion, is devoted to R&D. DOE's basic science programs address Americans' passion for discovery -- probing energy and matter at the most fundamental level, decoding genetic secrets, revealing the properties of novel materials. DOE's technology programs, many in partnership with the private sector, sustain the nuclear peace, help provide abundant clean energy, and promote environmental stewardship. DOE's unique national laboratories and cutting-edge major research facilities continue to define new frontiers. The success of this system over many years, and its importance to American society in the future, is highlighted by the prestigious 1997 R&D 100 Awards, no fewer than 36 of which went to DOE supported work. Our energy R&D programs will draw upon these world class scientific and technical resources. ENERGY AND THE NATIONAL INTEREST Affordable and abundant supplies of energy are critical to economic, environmental and national security. Energy is key to economic performance; it offers new market opportunities for business; it is a global commodity of strategic importance; and energy impacts the environment. United States expenditures for energy now top $500 billion annually, accounting for over 7.5 percent of our gross domestic product (GDP). The annual electricity bill for American consumers is roughly $200 billion and the cost of energy for U.S. manufacturing industries alone stands at $100 billion per year. The United States decreased its energy use per dollar of GDP by 30 percent between 1975 and 1986, in essence representing an annual energy savings today of over $170 billion. Despite this track record, the energy intensity of the U.S. economy is 50 percent higher than that of other industrialized nations and the potential for increased energy efficiencies in the U.S. economy remains considerable. Energy and Global Business Opportunities The global market for energy supply equipment is about $300 billion annually. This will grow proportionately as world energy capacity doubles over the next few decades. If we include the value of products whose marketability depends upon energy performance -- such as cars or appliances -- the global market reaches into the trillions of dollars. The United States -- with its strong scientific and technological leadership, capacity for sustained innovation and position as the preeminent economic power in the world -- needs energy policies that position us to take advantage of this large and growing global export market. Energy is a Strategic Global Commodity We learned through harsh experience during the two oil shocks of the 1970's, and the disruption of oil markets resulting from the Gulf War, that the price and availability of energy resources in one region can have global implications. The Persian Gulf -- one of the most politically volatile regions in the world -- currently supplies about one half of the world's exports of oil and this figure is expected to go even higher over the next 15 years. The world will likely double its energy use by 2030 and quadruple its use by the end of the next century. Oil demand is projected to grow by about two percent annually over the next 20 years. Total world energy consumption is projected to reach 560 quadrillion Btu in 2015, an increase of 200 quadrillion Btu over 1995 totals. Competition with, and within, the developing world for scarce fossil fuel resources will become intense over the next several decades. It is essential that we continue to diversify our energy supply, both in the energy options we choose and the regions of the world from which we import oil. Energy and Environmental Security Energy production and use are principal contributors to local, regional and global environmental problems. Smog, acid rain and particulates affect quality of life at local and regional levels. Over the past two decades, U.S. emissions of SO,, NO, and CO2 were lower than they otherwise would have been, due in no small part to technological innovations such as: more energyefficient automobiles, scrubbers on power plants, more energy efficient buildings and home appliances, and a slow but steady infiltration of the market by alternative fuels. Much more remains to be done, and can be done, with concomitant health and quality of life improvements for tens of millions of Americans. On a global scale, there is no serious doubt that human activities associated with energy production and use, primarily of fossil fuels, have over the last few decades significantly altered the composition of atmospheric gases. World carbon emissions are expected to increase by 3.5 billion metric tons over current levels by 2015, if world energy consumption reaches levels projected by DOE's Energy Information Administration. Although a detailed understanding of regional impacts awaits further research, scientific analysis overwhelmingly suggests the possibility of major societal dislocations. Prudence demands a measured but strong response in ensuring that sustained technological innovation positions us for continued prosperity and quality of life. A Comprehensive National Energy Strategy The Administration recently released for comment a draft framework for a comprehensive energy strategy, and we look forward to discussion with the Committee, the Congress, and the public in the weeks ahead. It is organized around several common sense, high level goals: Improve the efficiency of the energy system -- make more productive use of energy resources in order to enhance overall economic performance while protecting the environment and advancing national security; Ensure against energy disruptions -- protect our economy from external threats of Promote energy production and use in ways that reflect human health and Expand future energy choices -- pursue continued progress in our science and Cooperate internationally on energy issues -- develop the means to identify, Technology is the common thread in our efforts to realize all of these goals that support our economic, national and environmental security. Our success in reaching these goals tomorrow depends on our energy R&D investments today. SCIENCE, TECHNOLOGY AND ENERGY There is no one "silver bullet" that will solve our future energy needs. A broad and balanced R&D portfolio is essential. Fossil fuels will continue to be the world's dominant energy source for a considerable time under any plausible scenario. Thus, improved efficiency, increased use of natural gas, reduced environmental impact in fossil resource recovery, pollution abatement, and sequestration of carbon following combustion are all important goals to be advanced by new technology. Renewable energy technologies, with electricity delivered at costs roughly comparable with fossil sources, may hold the key for appreciably slowing global warming in the longer term, while offering myriad additional benefits. Technology options for safe, proliferation-resistant, waste-minimizing, economic nuclear power need to be preserved. Basic research continues to provide the foundation both for new technologies and for the policy framework that will evolve as the human health, environmental and climate impacts of energy use become increasingly well understood. Indeed, The President's Committee of Advisors on Science and Technology (PCAST), in their November 1997 report Federal Energy Research and Development for the Challenge of the Twenty-First Century, advocated a substantial and sustained increase across the entire energy R&D portfolio. In the remainder of this testimony, I will discuss five R&D pathways in the DOE research portfolio that will address our economic, national security and environmental goals, including the climate change issue. 1. Increasing our Domestic Energy Supply We have or are developing technology pathways to increase our access to domestic fossil energy resources while minimizing impacts on the environment. The Department's current oil and gas program is projected to stimulate about 1,000,000 barrels per day of additional liquids production by 2010, about 20 percent short of a production goal that would stabilize domestic production after 2005. Thus, we must continue to look for opportunities to partner with our domestic oil and gas producers to: (a) improve the accuracy of reservoir imaging and diagnostics; (b) expand the use of enhanced oil recovery processes, such as CO, flooding, to basins beyond those that have been the traditional targets; and (c) reduce the cost of effective environmental protection in such areas as the minimization of produced water and the development of more effective air emission control technologies. Last month, I saw firsthand the power and potential of technology during a visit to the Alaska North Slope where a significant percentage of our domestic oil and gas is produced. While the Prudhoe Bay development impacted two percent of the surface area, the new Alpine field will impact only two tenths of one percent of the surface because of new drilling technologies. The North Slope also has huge reserves of natural gas, very remote from an adequate market. Last year, DOE initiated a cost-shared, joint government-industry collaboration to produce a revolutionary ceramic membrane that might significantly lower the cost of chemically converting natural gas into a middle distillate liquid. Such a breakthrough in the current limitations that transportation places on natural gas could add a billion barrels or more of vital liquids to our energy supply. The increased availability of natural gas could help reduce greenhouse gas emissions by substituting for more carbon-intensive fossil fuels. It is worth noting in this connection that one of the 1997 R&D 100 Awards the Department received was for the development of an energy supply technology through a laboratory-industrial partnership -- 3D seismic oil exploration software using supercomputers. For the first time, operators are performing relatively fine scale modeling of very large oil fields in their entirety, thereby increasing domestic energy resources, such as North Slope oil. The underlying computational and simulation tools were actually developed for nuclear stockpile stewardship. This is just one example of how the core competencies in the DOE labs and programs often bear fruit across multiple missions. And, as our nuclear stockpile mission drives American computational capability to 100 trillion operations per second in the next decade, dramatically enhanced simulation capability will enhance numerous energy and environmental R&D programs as well, including much higher resolution studies of global systems with concomitant improvement in regional climate predictive power. 2. Efficient Use of Dominant Energy Options Energy efficiency is not some "green" alternative to the "real business" of traditional energy investments; rather, it is grounded in better use of our dominant energy resources, in particular fossil fuels. Advances in energy efficiency technologies could deliver substantial near-term carbon reducing impacts over the next decade by decreasing the "energy intensity" (energy consumption per dollar of GDP) of the U.S. economy. The investments we make in energy efficiency do not simply save energy - they represent one of the cheapest, least intrusive ways of accomplishing all of our environmental objectives as well as contributing to the productivity and competitiveness of our economy and to energy security. Consequently, energy efficiency is a key thrust in our FY 1999 energy R&D budget. Buildings. One-third of energy and two-thirds of electricity in the U.S. is consumed in buildings. Current and new technologies have a large potential to reduce energy use, cut emissions and save money for consumers and businesses. In the buildings sector, DOE is developing, in close collaboration with industry, efficient equipment, materials, and |